<PAGE>

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               AMENDMENT NO. 1 TO
                                    FORM 20-F

[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12 (b) OR (g) OF THE SECURITIES
    EXCHANGE ACT OF 1934
                                       OR

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2003
                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

                        COMMISSION FILE NUMBER 333-12634
                      GALEN HOLDINGS PUBLIC LIMITED COMPANY
             (Exact name of Registrant as specified in its charter)

                                NORTHERN IRELAND
                 (Jurisdiction of incorporation or organization)

         SEAGOE INDUSTRIAL ESTATE, CRAIGAVON, NORTHERN IRELAND BT63 5UA
                    (Address of principal executive offices)

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
                                      NONE

SECURITIES REGISTERED OR TO BE REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:

<TABLE>
<CAPTION>
            TITLE OF EACH CLASS             NAME OF EACH EXCHANGE ON WHICH REGISTERED
            -------------------             -----------------------------------------
<S>                                         <C>
    AMERICAN DEPOSITARY SHARES, EACH                NASDAQ(R) NATIONAL MARKET
REPRESENTING 4 ORDINARY SHARES, PAR VALUE
   10.0 U.K. PENCE PER ORDINARY SHARE
</TABLE>

SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION PURSUANT TO SECTION 15 (d)
                                  OF THE ACT:
                                      NONE

         Indicate the number of outstanding shares of each of the issuer's
classes of capital or common stock as of the close of the period covered by the
annual report:

 ORDINARY SHARES, NOMINAL VALUE 10.0 U.K. PENCE PER ORDINARY SHARE 188,209,895

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                    Yes: [X]                          No: [ ]

         Indicate by check mark which financial statement item the Registrant
has elected to follow:

                   Item 17 [ ]                      Item 18 [X]

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                PAGE
                                                                                                ----
<S>        <C>                                                                                  <C>
PART I
Item 1.    Identity of Directors, Senior Management and Advisers............................      4
Item 2.    Offer Statistics and Expected Timetable..........................................      4
Item 3.    Key Information..................................................................      4
  A.       Selected Financial Data..........................................................      4
  B.       Capitalization and Indebtedness..................................................      6
  C.       Reasons for the Offer and Use of Proceeds........................................      6
  D.       Risk Factors.....................................................................      6
Item 4.    Information on the Company.......................................................     11
  A.       History and Development of the Company...........................................     11
  B.       Business Overview................................................................     12
  C.       Organizational Structure.........................................................     25
  D.       Property, Plant and Equipment....................................................     25
Item 5.    Operating and Financial Review and Prospects.....................................     25
  A.       Operating Results................................................................     25
  B.       Liquidity and Capital Resources..................................................     30
  C.       Research and Development, Patents and Licenses, Etc. ............................     32
  D.       Trend Information................................................................     32
  E.       Off Balance Sheet Arrangements...................................................     33
  F.       Tabular Disclosure of Contractual Obligations ...................................     33
Item 6.    Directors, Senior Management and Employees.......................................     33
  A.       Directors and Senior Management..................................................     33
  B.       Compensation.....................................................................     35
  C.       Board Practices..................................................................     35
  D.       Employees........................................................................     37
  E.       Share Ownership..................................................................     37
Item 7.    Major Shareholders and Related Party Transactions................................     38
  A.       Major Shareholders...............................................................     38
  B.       Related Party Transactions.......................................................     38
  C.       Interests of Experts and Counsel.................................................     39
Item 8.    Financial Information............................................................     39
  A.       Consolidated Statements and Other Financial Information..........................     39
Item 9.    The Offer and Listing............................................................     40
  A.4.     Market Price Information.........................................................     40
  C.       Markets on Which our Ordinary Shares Trade.......................................     41
Item 10.   Additional Information...........................................................     41
  A.       Share Capital....................................................................     41
  B.       Memorandum and Articles of Association...........................................     41
  C.       Material Contracts...............................................................     42
  D.       Exchange Controls................................................................     44
  E.       Taxation.........................................................................     44
  H.       Documents on Display.............................................................     47
Item 11.   Quantitative and Qualitative Disclosures about Market Risk.......................     47
Item 12.   Description of Securities other than Equity Securities...........................     48
PART II
Item 13.   Defaults, Dividend Arrearages and Delinquencies..................................     49
Item 14.   Material Modifications to the Rights of Security Holders and Use of Proceeds.....     49
Item 15.   Controls and Procedures .........................................................     49
Item 16A.  Audit Committee Financial Expert.............. ..................................     49
Item 16B.  Code of Ethics...................................................................     49
</TABLE>

<PAGE>

<TABLE>
<S>        <C>                                                                                 <C>
Item 16.   [Reserved].......................................................................    49
PART III
Item 17.   Financial Statements.............................................................    50
Item 18.   Financial Statements.............................................................    50
Item 19.   Exhibits.........................................................................    82
</TABLE>

                                       2
<PAGE>
                                EXPLANATORY NOTE

         This annual report on Form 20-F amends the annual report filed with the
Securities and Exchange Commission on December 31, 2003 to attach additional
exhibits.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

         This annual report and the documents incorporated by reference in this
annual report contain certain statements that may be deemed to be
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. This Act provides safe harbor protections for
forward-looking statements in order to encourage companies to provide
prospective information about their businesses. Statements that are not
historical facts, including statements about our plans, beliefs, objectives,
expectations and intentions, are forward-looking statements. These statements
are based on current plans, estimates and projections, and therefore you should
not place too much reliance on them. The words "believe," "expect,"
"anticipate," "intends," "estimate," "forecast," "project" and similar
expressions are generally intended to identify forward-looking statements.
Forward-looking statements speak only as of the date they are made, and we
undertake no obligation to update any of them in light of new information or
future events. Forward-looking statements involve inherent risks and
uncertainties. Although we believe the expectations expressed in the
forward-looking statements are based on reasonable assumptions within the bounds
of our knowledge of our business, including management's examination of
historical operating trends, data contained in our records and other third party
data, we caution you that a number of important factors could cause actual
results or outcomes to differ materially from those expressed in any
forward-looking statement. These factors include, but are not limited to, the
following:

         -    competitive factors in the industries in which we operate;

         -    government regulation affecting the development, manufacture,
              marketing and sale of pharmaceutical products, including the
              ability to obtain necessary regulatory approvals;

         -    production or regulatory problems with third party manufacturers;

         -    customer acceptance of new products, including products using our
              vaginal ring technology;

         -    increase in litigation, including product liability claims and
              patent litigation;

         -    the loss of key senior management or scientific staff;

         -    pricing pressures by managed care organizations or government
              sponsored health systems, increased use of restricted formulary
              lists and importation of drugs from Canada;

         -    our ability to manage the growth of our business and the
              integration of new businesses and products;

         -    our ability to protect our intellectual property;

         -    the perceived health effects of hormone replacement therapy
              products; and

         -    other risks described from time to time in the reports filed by us
              with the Securities and Exchange Commission.

         We also disclose important factors to you that could cause our actual
results to differ materially from those expressed in any forward-looking
statement under "Item 3. Key Information - Risk Factors" and "Item 5. Operating
and Financial Review and Prospects" and elsewhere in this annual report.

                                       3
<PAGE>

PART I

Item 1. Identity of Directors, Senior Management and Advisers.

         Not applicable.

Item 2. Offer Statistics and Expected Timetable.

         Not applicable.

Item 3. Key Information.

A. Selected Financial Data

Set forth below is selected consolidated financial data of Galen Holdings PLC
and its subsidiaries, which is collectively referred to as "Galen", "the
Company", "we", "us" and "our" in this annual report, at the dates and for the
years indicated. The selected consolidated operations data for the three years
ended September 30, 2003 and the selected balance sheet data as of September 30,
2003 and 2002 were derived from our audited U.S. GAAP financial statements for
those periods and as of those dates, which are included in Part III of this
annual report. The selected consolidated operations data for the two years ended
September 30, 2000 and the selected balance sheet data as of September 30, 2001,
2000 and 1999 were derived from our audited U.S. GAAP historical financial
statements, which are not included in this annual report. The financial
statements for the years 1999 through 2002 were originally prepared in pounds
sterling and in accordance with U.K. GAAP. The statements for those years have
been converted into U.S. dollars and restated in accordance with U.S. GAAP. The
financial statements for 2003 were originally prepared in U.S. dollars and in
accordance with U.K. GAAP. In this annual report, the financial statements for
2003 have been restated in accordance with U.S. GAAP. The selected consolidated
financial data set forth below should be read in conjunction with "Item 5:
Operating and Financial Review and Prospects" in this annual report and our
audited consolidated financial statements included in Part III of this annual
report.

                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                                                YEARS ENDED SEPTEMBER 30,
                                                       ---------------------------------------------------------------------------
                                                           1999           2000            2001            2002            2003
                                                       ------------   ------------    ------------    ------------    ------------
                                                                          (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                                    <C>            <C>             <C>             <C>             <C>
STATEMENT OF OPERATIONS DATA:
Product revenue (1) ................................   $     62,925   $     69,466    $    183,822    $    235,221    $    432,262
                                                       ------------   ------------    ------------    ------------    ------------

Costs and expenses :
     Cost of sales (excluding depreciation
        shown below) ...............................         29,113         33,067          44,243          51,550          72,656
     Selling, general and administrative ...........          6,957          9,548          64,760          64,530         135,875
     Research and development ......................          6,482         12,504          13,694          19,783          28,685
     Depreciation ..................................          3,376          3,423           4,303           5,323           6,844
     Amortization ..................................            231          2,538          26,185          19,497          42,323
     Acquired in-process research and
          development (2) ..........................          1,664         26,400               -               -               -
                                                       ------------   ------------    ------------    ------------    ------------
Total operating expenses ...........................         47,823         87,480         153,185         160,683         286,383
                                                       ------------   ------------    ------------    ------------    ------------
Operating income (loss) ............................         15,102        (18,014)         30,637          74,538         145,879
                                                       ------------   ------------    ------------    ------------    ------------
     Net interest income (expense) .................            173          1,953         (16,041)        (18,836)         (8,064)
                                                       ------------   ------------    ------------    ------------    ------------
Income (loss) before taxes .........................         15,275        (16,061)         14,596          55,702         137,815
                                                       ------------   ------------    ------------    ------------    ------------
     Provision for income taxes ....................          4,583          4,049           6,011          18,654          41,660
                                                       ------------   ------------    ------------    ------------    ------------
Income (loss) from continuing operations ...........         10,692        (20,110)          8,585          37,048          96,155
                                                       ------------   ------------    ------------    ------------    ------------
     Discontinued operations, net of tax (3) .......          8,345         12,753           7,841         108,128               -
                                                       ------------   ------------    ------------    ------------    ------------
Net income (loss) ..................................   $     19,037  ($      7,357)   $     16,426    $    145,176    $     96,155
                                                       ============   ============    ============    ============    ============

NET INCOME (LOSS) PER ADS:
Continuing operations
     Basic (4) (5) (6) .............................   $       0.37  ($       0.66)   $       0.21    $       0.80    $       2.10
                                                       ============   ============    ============    ============    ============
     Diluted (4) (5) (6) ...........................   $       0.37  ($       0.66)   $       0.21    $       0.80    $       2.08
                                                       ============  =============    ============    ============    ============

NET INCOME (LOSS) PER ADS:
     Basic (4) (5) (6) .............................   $       0.65  ($       0.24)   $       0.41    $       3.13    $       2.10
                                                       ============  =============    ============    ============    ============
     Diluted (4) (5) (6) ...........................   $       0.65  ($       0.24)   $       0.40    $       3.12    $       2.08
                                                       ============  =============    ============    ============    ============

WEIGHTED AVERAGE ADS EQUIVALENTS OUTSTANDING:
     Basic (3) (4) (5) .............................     29,082,360     30,361,093      40,388,685      46,311,241      45,893,514
                                                       ============   ============    ============    ============    ============
     Diluted (3) (4) (5) ...........................     29,097,402     30,361,093      41,040,069      46,582,659      46,126,060
                                                       ============   ============    ============    ============    ============
Cash dividend per ADS ..............................   $       0.09   $       0.11    $       0.13    $       0.16    $       0.21
                                                       ============   ============    ============    ============    ============
Cash dividend per ADS ..............................   L       0.06   L       0.07    L       0.09    L       0.11    L       0.13
                                                       ============   ============    ============    ============    ============
</TABLE>

<TABLE>
<CAPTION>
                                                                          AS OF SEPTEMBER 30,
                                                ------------   ------------   ------------   ------------   ------------
                                                    1999           2000           2001           2002            2003
                                                ------------   ------------   ------------   ------------   ------------
                                                                             (IN THOUSANDS)
<S>                                             <C>            <C>            <C>            <C>            <C>
BALANCE SHEET DATA:
Cash and cash equivalents (4) (6) (7) .......   $      7,523   $    118,647   $    326,076   $    313,012   $     89,073
Total assets (4) (6) (7) ....................        107,338        682,061      1,150,039      1,072,231      1,565,365
Long-term debt (4) (7) (8) ..................         22,269        219,412        257,388         51,345        342,153
Shareholders' equity (4) (6) ................        106,423        444,269        738,183        909,007        997,125
Share capital (4) (6) .......................         19,646         25,498         29,902         29,981         30,046
Additional paid-in capital (4) (6) ..........   $     44,229   $    399,656   $    673,144   $    677,417   $    676,528
                                                ============   ============   ============   ============   ============
</TABLE>

                                       5

<PAGE>

         (1)  Product revenue in 2003 increased by $197 million compared to 2002
              primarily due to our 2003 product acquisitions and increased
              revenues of 27% for our existing products.

         (2)  Write-off of acquired in-process product research and development
              in 1999 was related to our acquisition of the Bartholomew Rhodes
              group, and in 2000 to our acquisition of Warner Chilcott.

         (3)  Discontinued operations represented our pharmaceutical services
              businesses, which were Interactive Clinical Technologies ("ICTI"),
              sold as of August 23, 2002, Clinical Trials Services ("CTS"), sold
              as of May 31, 2002, and Chemical Synthesis Services ("CSS"), sold
              as of December 31, 2001. The 2002 increase in discontinued
              operations was due to the gain on the disposal of those businesses
              of $101.1 million, net of taxes of $3.9 million. We received
              approximately $229 million of proceeds, net of costs, for the sale
              of these businesses. No results for discontinued operations were
              recorded in 2003 as our discontinued operations were disposed of
              in their entirety by the end of our fiscal year 2002.

         (4)  Acquisition of Warner Chilcott (September 29, 2000) in exchange
              for Galen ordinary shares and equivalents had the effect of
              increasing cash by $62.2 million, intangible product assets by
              $224.3 million, goodwill by $212.1 million, shareholders' equity
              by $314.1 million and interest bearing indebtedness by $206
              million. Galen issued 7.9 million American Depositary Shares
              ("ADSs") and rights to acquire an additional 2.6 million ADSs in
              the transaction. Each ADS represents four ordinary shares. Because
              the transaction closed on the last business day of fiscal 2000 the
              shares and equivalents issued had a nominal impact on the basic
              and diluted weighted average shares outstanding for 2000.

         (5)  Placement of 6 million ordinary shares (1.5 million ADS
              equivalents) in November 1999 raising net proceeds of
              approximately $57 million.

         (6)  Issuance of 26.5 million ordinary shares (6.6 million ADS
              equivalents) in relation to our July 2001 equity offering raising
              proceeds of approximately $268 million net of fees. In 2002, we
              repurchased 2 million ordinary shares (0.5 million ADS
              equivalents).

         (7)  Acquisition of products for approximately $650 million in 2003,
              financed with cash on hand and $350 million in long term debt.

         (8)  Repayment of a total of $249.3 million in long-term debt in 2002.

B. Capitalization and Indebtedness

         Not applicable.

C. Reasons for the Offer and Use of Proceeds

         Not applicable.

D. Risk Factors

         You should carefully consider the risk factors described below, as well
as the other information included in this annual report. Our business, financial
condition or results of operations could be materially adversely affected by any
or all of these risks, or by other risks that we presently cannot identify.

IF ANY PRODUCTS ARE APPROVED THAT COMPETE WITH ANY OF OUR BRANDED PHARMACEUTICAL
PRODUCTS, SALES OF OUR PRODUCTS MAY BE ADVERSELY AFFECTED.

         Our branded pharmaceutical products are or may become subject to
competition from generic equivalents because there is no proprietary protection
for some of the branded pharmaceutical products we sell. Generic substitutes for
some of our branded pharmaceutical products are sold by other pharmaceutical
companies which claim that their products provide equivalent therapeutic
benefits at a lower cost. For instance, Estrace(R) tablets and Loestrin(R)
currently face generic competition and, although Estrace(R) tablets accounts for
about 13.5% of oral estrogen therapy products prescribed in the United States
according to IMS Health, a market data provider. Estrace(R) tablets currently
experiences a substitution rate in excess of 90%. Typically, upon the
introduction of a generic version of a branded product, 90% or more of the
prescriptions written by authorized prescribers for the branded product may be
filled with a generic at the pharmacy, resulting in a commensurate loss in sales
of the branded product (substitution rates are lower for products which enjoy
greater brand loyalty, such as oral contraceptives). In addition, we have
entered into a letter of intent with Barr Laboratories ("Barr") that would
permit Barr to launch generic versions of femhrt(R) and Estrostep(R) six months
prior to patent expiry in 2010 and 2008, respectively. Under a separate letter
of intent, Barr would grant Galen an option to acquire an exclusive license for
Barr's generic version of our currently marketed Ovcon(R) 35 oral contraceptive,
which is

                                       6
<PAGE>

not protected by a patent or other exclusivity rights. These transactions are
subject to negotiation of definitive agreements, completion of due diligence and
other conditions including antitrust review by the U.S. Federal Trade
Commission. We cannot assure you what effect, if any, these activities will have
on our results of operations. In addition, we are engaged in litigation to
enforce the patent for Sarafem(R). An adverse outcome in this litigation would
permit the marketing of generic competitors to Sarafem(R) which would likely
have a material adverse effect on our results of operations because the
introduction of a generic competitor to Sarafem(R) would likely drastically
reduce sales of Sarafem(R). In addition, legislation enacted in the United
States allows, or, in a few instances, in the absence of specific instructions
from the prescribing physician, mandates the use of generic products rather than
brand name products. This legislation and other pressure to reduce
pharmaceutical costs may result in pharmacists filling prescriptions for our
branded products with generic substitutes. Increased competition from the sale
of competing generic pharmaceutical products may cause a material decrease in
revenue from our branded pharmaceutical products.

BECAUSE WE RELY ON INDEPENDENT MANUFACTURERS FOR MANY OF OUR PRODUCTS, ANY
PRODUCTION OR REGULATORY PROBLEMS COULD AFFECT OUR SUPPLY OF PRODUCTS AND
RESULTS OF OPERATIONS.

         Nearly all of our pharmaceutical products are manufactured for us under
contracts with third parties. Accordingly, we are dependent upon our contract
manufacturers for the manufacture of our products. Any breach of their
contractual obligations could adversely affect us. We cannot assure you that our
contract manufacturers will be able to manufacture our products without
interruption, that they will comply with their obligations under our various
supply arrangements, or that we will have adequate remedies for any breach. In
addition, their failure to comply with regulatory requirements and to keep their
facilities in good working order could adversely affect the supply of products
to us.

         The FDA and the MHRA must approve suppliers of certain active and
inactive pharmaceutical ingredients and certain packaging materials used in our
products as well as suppliers of finished products. The development and
regulatory approval of our products are dependent upon our ability to procure
these ingredients, packaging materials and finished products from FDA and MHRA
approved sources. FDA and MHRA approval of a new supplier would be required if,
for example, the supplier breached its obligations to us, active ingredients,
packaging materials or finished products were no longer available from the
initially approved supplier or if that supplier had its approval from the FDA
and MHRA withdrawn. The qualification of a new supplier could potentially delay
the manufacture of the drug involved. Furthermore, we may not be able to obtain
active ingredients, packaging materials or finished products from a new supplier
on terms that are at least as favorable to us as those agreed with the initially
approved supplier or at reasonable prices.

OUR TRADEMARKS, PATENTS AND OTHER INTELLECTUAL PROPERTY ARE VALUABLE ASSETS AND
IF WE ARE UNABLE TO PROTECT THEM FROM INFRINGEMENT OUR BUSINESS PROSPECTS MAY BE
HARMED.

         Due to our branded product focus, we consider our trademarks to be
valuable assets. Therefore, we actively manage our trademark portfolio, maintain
long-standing trademarks and obtain trademark registrations for new brands. We
also police our trademark portfolio against infringement. However, our efforts
may be unsuccessful against competitors or other violating entities and we may
not have adequate remedies for any breach because, for example, a violating
company may be insolvent.

         We also rely on patents, trade secrets and proprietary knowledge to
protect our products. We generally seek to protect our proprietary rights by
filing applications for patents on certain inventions, enforcing our legal
rights against third parties that we believe may infringe our intellectual
property rights, and entering into confidentiality, non-disclosure and
assignment of invention agreements with our employees, consultants, licensees
and other companies. We do not ultimately control whether our patent
applications will result in issued patents, whether we will be successful in
enforcing our legal rights against third party infringers, whether our
confidentiality, non-disclosure and assignment of invention agreements will not
be breached and whether we will have adequate remedies for any such breach, or
that our trade secrets will not otherwise become known by competitors.

         Eli Lilly and Company ("Lilly") initiated legal proceedings in 2002
against Teva Pharmaceuticals ("Teva") for patent infringement. These proceedings
were initiated in response to an abbreviated new drug application filed by Teva
to market a generic version of Sarafem(R). Galen acquired the U.S. sales and
marketing rights to Sarafem(R) in January 2003. Galen has continued to pursue
these claims vigorously. The bench trial in this case took place in November
2003. After the exchange of post-trial briefs and responses in January 2004, the
case will be decided. We cannot assure you when

                                       7
<PAGE>
the case will be decided or whether the patent will ultimately be held valid,
enforceable or infringed. In the event the patent is found valid and infringed,
an injunction would be available until at least November 2007. An adverse
outcome in this proceeding would likely have a material adverse effect on our
results of operations because the introduction of a generic competitor to
Sarafem(R) would likely drastically reduce sales of Sarafem(R).

         There has been substantial litigation in the pharmaceutical industry
with respect to the manufacture, use and sale of new products that are the
subject of conflicting patent rights. These lawsuits relate to the validity and
infringement of patents. The expense of defending lawsuits brought against us
could cause us not to defend these suits and abandon the affected products. The
ultimate outcome of this type of litigation, if brought, may not be favorable
and could adversely impact our operations.

IF WE ARE NOT SUCCESSFUL IN MANAGING THE GROWTH OF OUR BUSINESS OR THE
INTEGRATION OF NEW PRODUCT ACQUISITIONS, OUR BUSINESS PROSPECTS COULD BE HARMED
AND OUR FINANCIAL PERFORMANCE ADVERSELY AFFECTED.

         Over the past few years we have acquired a number of products. Growth
by acquisition involves risks, including the failure or inability to effectively
integrate acquired products into our portfolio. If we cannot successfully
integrate these acquired products, or should we incur greater than anticipated
costs, or expend unplanned managerial and other resources on their integration,
we may not achieve the anticipated revenue and cost benefits, our growth could
be slower than we anticipate, we may incur an impairment charge for our
intangible assets and our financial performance could be adversely affected.

         Our future growth will depend to some extent upon our ability to
acquire new products. We have and will continue to pursue product acquisitions
that could complement or expand our operations. Many of our present and
potential competitors have research and development capabilities which may allow
them to develop new or improved products that compete with our products. The
failure to acquire new products or to develop, on a commercially viable basis,
new products will lead to slower growth than we anticipate and limit our ability
to meet our strategic objectives.

         We cannot be sure that we will be able to identify appropriate
opportunities in the future. If an acquisition candidate is identified, we do
not know if we will be able to negotiate successfully the terms of the
acquisition, finance the acquisition or integrate an acquired product into our
existing operations. The negotiation and completion of potential acquisitions
could cause significant diversion of management's time and resources.

AN INCREASE IN PRODUCT LIABILITY CLAIMS, OR PRODUCT RECALLS, COULD HARM OUR
BUSINESS.

         The development, manufacture, testing, marketing and sale of
pharmaceutical products entail significant risk of product liability claims or
recalls. Our products are, in the substantial majority of cases, designed to
affect important bodily functions and processes. Unforeseen side-effects caused
by or manufacturing defects inherent in the products sold by us could result in
exacerbation of a patient's condition, further deterioration of the patient's
condition or even death. The occurrence of such an event could result in product
liability claims and/or recall of one or more of our products. Claims may be
brought by individuals seeking relief for themselves or, in certain
jurisdictions, by groups seeking to represent a class.

         Product liability insurance coverage is expensive, can be difficult to
obtain and may not be available in the future on acceptable terms, if at all.
Our product liability insurance may not cover all the future liabilities we
might incur in connection with the development, manufacture or sale of our
current and potential products. In addition, we may not continue to be able to
obtain insurance on satisfactory terms or in adequate amounts. A successful
claim or claims brought against us in excess of available insurance coverage or
product recalls in the future could, regardless of their outcome, have a
material adverse effect on our business, results of operations and reputation
and on our ability to obtain and retain customers for our products. Furthermore,
we could be rendered insolvent if we do not have sufficient financial resources
to satisfy any liability resulting from such a claim or to fund the legal
defense of such a claim.

         Product recalls may be issued at our discretion or at the discretion of
certain of our suppliers, the FDA, MHRA, other government agencies or other
entities having regulatory authority for pharmaceutical sales. We cannot assure
you that product recalls will not occur in the future. Any recall of a
significant product could materially adversely affect our business by rendering
us unable to sell that product for some time.

                                       8
<PAGE>

DELAYS AND UNCERTAINTIES IN THE GOVERNMENT APPROVAL PROCESS FOR NEW PRODUCTS
COULD RESULT IN LOST MARKET OPPORTUNITIES AND HAMPER OUR ABILITY TO RECOUP COSTS
ASSOCIATED WITH PRODUCT DEVELOPMENT.

         The clinical development, manufacture, marketing and sale of
pharmaceutical products are subject to extensive supranational, national, state
and local regulations. We cannot predict the extent to which we may be affected
by legislative and other regulatory actions and developments in the countries
and jurisdictions in which we operate concerning various aspects of our
operations, products and the healthcare field generally. New governmental
regulation may adversely affect our operations or competitive position. We are
required to obtain, as are other drug companies manufacturing or marketing
drugs, approval from the U.S. Food and Drug Administration (the "FDA"), the U.K.
Medicines and Healthcare products Regulatory Agency (the "MHRA"), and other
regulatory bodies based upon pre-clinical testing, manufacturing chemistry and
control data, bioavailability and other clinical data which we are required to
generate prior to gaining regulatory approval necessary to begin marketing most
new drug products. The generation of this required data is regulated by the FDA,
the MHRA and other regulatory bodies. This process can be time-consuming and
expensive without assurance that the data will be adequate to justify approval
of our proposed new products. If we are not able to obtain governmental approval
for our products, we will not be able to recoup the costs associated with the
generation of this data. These costs may be substantial and may have an adverse
effect on our results of operations if not recaptured.

         Even if we are successful in obtaining all required premarketing
approvals and postmarketing requirements, our inability or failure to comply
with other regulations could result in suspension or limitation of approvals.
Furthermore, even if we obtain regulatory approvals, the terms of any product
approval, including labeling, may be more restrictive than desired and could
affect the marketability of our products.

THE LOSS OF THE SERVICES OF MEMBERS OF OUR SENIOR MANAGEMENT TEAM OR SCIENTIFIC
STAFF OR THE INABILITY TO ATTRACT AND RETAIN OTHER HIGHLY QUALIFIED EMPLOYEES
COULD IMPEDE OUR ABILITY TO MEET OUR STRATEGIC OBJECTIVES AND ADVERSELY AFFECT
OUR BUSINESS.

         Our success is dependent on attracting and retaining highly qualified
scientific, sales and management staff. We face intense competition for
personnel from other companies, academic institutions, government entities and
other organizations. The loss of key personnel, or our failure to attract and
retain other highly qualified employees, may impede our ability to meet our
strategic objectives.

         Pursuant to our business strategy, we intend to expand and develop new
technologies and products. This strategy will require us to hire additional
employees with expertise in areas that relate to the new technologies and
products. We cannot fully anticipate or predict the time and extent to which we
will need to hire this type of specialized personnel. As a result, there can be
no assurance that we will be successful in attracting and retaining the
personnel necessary to pursue fully our business strategy. We offer what we
believe to be competitive compensation packages and benefits. However, if
competitive conditions continue to intensify, then our cost of attracting and
retaining employees may escalate.

THE PERCEIVED HEALTH EFFECTS OF ESTROGEN AND COMBINED ESTROGEN-PROGESTOGEN
HORMONE THERAPY PRODUCTS MAY AFFECT THE ACCEPTABILITY AND COMMERCIAL SUCCESS OF
OUR PRODUCTS.

         Three of our products, Estrace(R) tablets, Estrace(R) cream and
Menoring(R)/Femring(R) are estrogen therapy ("ET") products, and one of our
products, femhrt(R), is a combined estrogen-progestogen therapy ("EPT") product.
These hormone therapy products are used by women to alleviate symptoms
associated with menopause. Recent studies have analyzed the health effects of ET
and EPT products. The outcome of these studies and any resulting changes in
labeling for our products may affect the acceptability of our products by
patients, the willingness of physicians to prescribe our products for their
patients or the duration of their therapy. In any such event, we may not achieve
our anticipated sales levels for these products and we may not be able to recoup
our investment in the development of our products and our overall rate of growth
may be lower.

                                       9
<PAGE>

CHANGES IN MARKET CONDITIONS INCLUDING LOWER THAN EXPECTED CASH FLOWS OR
REVENUES FOR OUR BRANDED PHARMACEUTICAL PRODUCTS MAY RESULT IN OUR INABILITY TO
REALIZE THE VALUE OF THESE PRODUCTS IN WHICH CASE WE MAY HAVE TO RECORD AN
IMPAIRMENT CHARGE.

         The pharmaceutical industry is characterized by rapid product
development and technological change, and, as a result, our pharmaceutical
products could be rendered obsolete or made uneconomical by the development of
new technology or new pharmaceutical products to treat the conditions currently
addressed by our products, technological advances that reduce the cost of
production or marketing or pricing actions by one or more of our competitors.

         We acquired a significant amount of goodwill in connection with our
acquisition of Warner Chilcott which is subject to annual or more frequent
impairment testing. We currently do not anticipate any impairment charges.

PRICING PRESSURES BY MANAGED CARE ORGANIZATIONS OR GOVERNMENT SPONSORED HEALTH
SYSTEMS AND REGULATIONS RELATING TO MEDICARE AND MEDICAID, HEALTHCARE REFORM,
PHARMACEUTICAL REIMBURSEMENT AND PRICING IN GENERAL COULD DECREASE OUR REVENUES.

         Our commercial success in producing, marketing and selling products
depends, in part, on the availability of adequate reimbursement from third party
healthcare payers, such as government bodies and agencies, including the U.K.
National Health Service (the "NHS"), private health insurers and managed care
organizations for the cost of the products and related treatment. The market for
our products may be limited by actions of third party payers. Third party payers
are increasingly challenging the pricing of pharmaceutical products and services
and reviewing their reimbursement practices and many managed healthcare
organizations are now limiting the number of pharmaceutical products that are on
their formulary lists in an effort to control and reduce costs associated with
patient drug therapies. The resulting competition among pharmaceutical companies
to place their products on these formulary lists has created a trend of downward
pricing pressure in the industry. Our products may not be included on the
formulary lists of managed care organizations and downward pricing pressures in
the industry generally may negatively impact our operations. Further, a number
of U.S. legislative and regulatory proposals aimed at changing the healthcare
system have been proposed. While we cannot predict whether any such proposals
will be adopted or the effect such proposals may have on our business, the
existence of such proposals, as well as the adoption of any proposal, may
increase industry-wide pricing pressures

PRESCRIPTION DRUG IMPORTATION FROM CANADA COULD INCREASE PRICING PRESSURE ON
CERTAIN OF OUR PRODUCTS AND COULD DECREASE OUR REVENUES AND PROFIT MARGINS.

Under pre-existing U.S. law, U.S. individuals may import prescription drugs from
Canada for their personal use under specified circumstances. Other imports
although illegal under U.S. law also enter the country as a result of the
resource constraints and enforcement priorities of the FDA and the U.S. Customs
Service. In addition, in December 2003, the United States enacted the Medicare
Prescription Drug, Improvement, and Modernization Act, which would permit
pharmacists and wholesalers to import prescription drugs into the United States
from Canada under specified circumstances. These additional import provisions
will not take effect until the Secretary of Health and Human Services makes a
required certification regarding the safety and cost savings of imported drugs
and the FDA has promulgated regulations setting forth parameters for
importation. If these provisions take effect, the volume of prescription drug
imports from Canada could increase significantly. Even if these provisions do
not take effect, the volume of prescription drug imports from Canada could
increase due to a variety of factors, including proposals by certain state and
local governments to facilitate Canadian imports. We currently sell Loestrin(R)
and femhrt(R) in Canada. In addition, Estrace(R) tablets, Dovonex(R) and
Dovobet(R) are sold in Canada by third parties. For the year ended September 30,
2003, Loestrin(R), femhrt(R) and Estrace(R) products accounted for 28.9% of our
sales. Due to government price regulation in Canada, these products are
generally sold in Canada for lower prices than in the United States. As a
result, if these drugs are imported into the United States from Canada, we may
experience reduced sales or profit margins.

                                       10
<PAGE>

WE CANNOT ASSURE YOU THAT OUR PRODUCTS USING THE VAGINAL RING DRUG DELIVERY
TECHNOLOGY WILL BE SUCCESSFUL.

         The successful launch of products using our proprietary vaginal ring
technology is a part of our growth strategy. Our vaginal ring technology
consists of a silicone ring, containing an active ingredient, which is inserted
into the vagina where the active ingredient is absorbed. To date, vaginal ring
technology has not been widely used as a drug delivery technology and it may not
be readily accepted by either prescribing physicians or their patients. We have
recently launched Femring(R), our first product using our proprietary vaginal
ring technology in the United States. We cannot assure you that sales of
Femring(R) will achieve anticipated results. Other alternative estrogen
therapies, including orally administered tablets, transdermal patches and
subcutaneous implants have each been used for some time and are familiar to many
prescribing physicians and their patients. If our vaginal ring products are not
accepted as an alternative method of administration of estrogen therapy, we may
not achieve our anticipated sales levels for these products. In such an event,
we may not be able to recoup our investment in the development of vaginal ring
products.

Item 4. Information on the Company.

A. HISTORY AND DEVELOPMENT OF THE COMPANY

         Galen Limited was founded in 1968 as a sales and marketing organization
focused on branded pharmaceutical products in the United Kingdom and Ireland. In
1999, we broadened our U.K. product portfolio with the acquisition of the
Bartholomew Rhodes group of companies for $32.7 million. We extended our branded
pharmaceutical products business into the United States on September 29, 2000,
when we acquired Warner Chilcott, marketer of Ovcon(R) and Estrace(R) cream
products, for $325.5 million.

         Since the acquisition of Warner Chilcott, we have disposed of our
pharmaceutical services businesses and focused our strategy on strengthening our
pharmaceutical products business, specifically in the areas of women's
healthcare and dermatology. In fiscal 2002, we sold our Chemical Synthesis
Services ("CSS") business, our Clinical Trials Services ("CTS") business and our
Interactive Clinical Technologies ("ICTI") business in separate transactions to
companies controlled by Dr. Allen McClay, a founder, former President and
Director of Galen and a significant shareholder in the Company for an aggregate
consideration of approximately $235 million. We have used the net proceeds from
these transactions to pursue selected product acquisitions and strategic
opportunities, and for general corporate purposes. In December 2003, we sold our
Pharmaceutical Development and Manufacturing Services business to a company
controlled by Dr. McClay for $34 million.

         We have strengthened our pharmaceutical products business since the
acquisition of Warner Chilcott through the following product acquisitions:

- In June 2001, we acquired Estrace(R) tablets, a branded estrogen therapy
product, from Bristol-Myers Squibb Company ("Bristol-Myers") for approximately
$95 million.

- In March 2002, we acquired Duricef(R), a cephalosporin antibiotic, and
Moisturel(R), a skin moisturizing cream, from Bristol-Myers for approximately
$40 million.

- In January 2003, we acquired the U.S. sales and marketing rights for
Sarafem(R) from Lilly for approximately $295 million. Sarafem(R) is a
prescription treatment for premenstrual dysphoric disorder ("PMDD"), a severe
form of premenstrual syndrome.

- In March 2003, we acquired the oral contraceptives Loestrin(R) and
Estrostep(R) and an oral continuous combined estrogen-progestogen hormone
therapy, femhrt(R), from Pfizer, Inc. ("Pfizer") for approximately $359 million,
with up to an additional $125 million payable, depending on how long market
exclusivity for Estrostep(R) and femhrt(R) is maintained.

         In addition, in April 2003, we entered into a major strategic alliance
in dermatology, including a co-promotion agreement for Dovonex(R), with
Bristol-Myers and a development agreement for Dovobet(R) with LEO Pharma A/S
("LEO Pharma"). Dovonex(R) is a leading non-steroidal product in the treatment
of psoriasis. Under the co-promotion agreement, we have agreed to promote
Dovonex(R) for Bristol-Myers, the current exclusive licensee of Dovonex(R), in
the United States. The term of the co-promotion agreement ends December 31,
2007. Galen will be compensated by

                                       11
<PAGE>

Bristol-Myers for achieving sales of Dovonex(R) above agreed levels. In the
early years of the co-promotion, we do not anticipate significant revenues from
this product Galen has an option to purchase Bristol-Myers's U.S. rights to
Dovonex(R) under pre-negotiated terms in January 2005 or January 2006 for a
purchase price of $250 million or $200 million, respectively, plus a royalty on
net sales of Dovonex(R) until the end of 2007, of 10% or 5%, respectively;
however, Bristol-Myers can refuse to consummate the sale of its rights to
Dovonex(R) prior to January 2006. If Galen exercises its option after August 1,
2004 but on or prior to August 1, 2005, Bristol-Myers is obliged to conclude the
purchase transaction in January 2006. The operative agreements governing the
relationships between the Company and Bristol-Myers and LEO Pharma are set forth
in the exhibits to this annual report.

         Dovobet(R) is a combination of the active agent in Dovonex(R)
(calcipotriene) and the steroid betamethasone dipropionate. A new drug
application ("NDA") for Dovobet(R) has not yet been submitted to the FDA,
however, Dovobet(R) has been approved and is currently marketed in 23 countries.
Under the terms of the Master Agreement between LEO Pharma and Galen (Chemicals)
Limited, dated April 1, 2003, for Dovonex(R) and Dovobet(R) ("Master
Agreement"), Galen paid $2 million to LEO Pharma in December 2001 and an
additional $5 million in April 2003. In addition, Galen paid $5 million to LEO
Pharma in April 2003 under the Development Agreement between LEO Pharma and
Galen (Chemicals) Limited dated April 1, 2003 related to the option to purchase
the rights to Dovonex(R). Galen will pay LEO Pharma a final milestone payment of
$40 million at the time Dovobet(R) receives final FDA approval. Upon final FDA
approval of Dovobet(R) and the satisfaction of other conditions which are set
forth in the agreements filed as exhibits to this annual report (including the
exercise of the Dovonex(R) option by Galen and the completion of the purchase of
Dovonex(R) rights by Galen) Galen will become the exclusive licensee of
Dovobet(R) in the United States, subject to the terms of a pre-negotiated
license and supply agreement.

         The acquisition of these new products and the alliances with
Bristol-Myers and LEO Pharma strengthen our product portfolio in the United
States and highlight our strategy to utilize acquisitions of products and
emphasize organic growth to build our positions in our core therapeutic areas.
For a description of our products see "B. -- Business Overview," below.

         During the year ended September 30, 2001, we spent $3.3 million on our
pharmaceutical services distribution facilities in Craigavon. The pharmaceutical
products business made capital expenditures of $3.8 million during the year
ended September 30, 2001 on warehousing in Larne, Northern Ireland. In the year
ended September 30, 2001, we made an additional $2.0 million in capital
expenditures, which included our accommodation facilities in Andover, New
Jersey. During the year ended September 30, 2002, capital expenditures for our
pharmaceutical services business totalled $7.6 million. During the year ended
September 30, 2002, the pharmaceutical products business made total capital
expenditures of $9.7 million, spending a total of $4.3 million in the Craigavon
and Larne facilities and $2.4 in a new warehouse located in Craigavon. During
the year ended September 30, 2003, our capital expenditures for our
pharmaceutical business totalled $6.2 million which included a total of $3.0
million of costs associated with the completion of our warehouse in Craigavon
and $2.2 million at our Larne facility in support of our VR development.

         We completed our initial public offering of shares in July 1997 when we
listed our ordinary shares on the London Stock Exchange. In September 1997, we
listed our ordinary shares on the Irish Stock Exchange. On September 29, 2000,
we listed our ordinary shares, represented by American Depositary Shares, or
ADSs, on the NASDAQ(R) National Market when we acquired Warner Chilcott. Each
ADS represents underlying ownership of four ordinary shares.

         We were originally incorporated and registered in Northern Ireland on
August 23, 1991 as a private limited company under the name Moyne Shelf Company
(No. 37) Limited. On November 25, 1991, we changed our name to Galen Holdings
Limited and on June 2, 1997, we re-registered as a public limited company and
changed our name to Galen Holdings Public Limited Company. The principal
legislation under which we operate is The Companies (Northern Ireland) Order
1986. Our registered office is at Seagoe Industrial Estate, Craigavon, Co.
Armagh, Northern Ireland BT63 5UA. Our telephone number is 011-44-28-3833-4974
and our website is at www.galenplc.com. The information on our website is not
deemed to be a part of this report. We have appointed CT Corporation System, 111
Eighth Avenue, New York, NY 10011, as agent for service of process.

B. BUSINESS OVERVIEW

         We are a specialty pharmaceutical company primarily focused on women's
healthcare and dermatology. We develop, manufacture, supply and market branded
prescription pharmaceutical products in the United States, United Kingdom

                                       12
<PAGE>

and Ireland. Our strategy comprises three elements: to continue organic growth
of our pharmaceutical business, develop new proprietary products and acquire
products that complement and strengthen our existing product range. For the year
ended September 30, 2003, we achieved record sales and profit growth, expanded
our product portfolio in our core therapeutic areas and we received NDA approval
for Femring(R).

         Our principal products include:

<TABLE>
<CAPTION>
PRODUCT                                  INDICATION                    ACTIVE INGREDIENT    AVAILABLE IN
-------                                  ----------                    -----------------    ------------
<S>                     <C>                                          <C>                    <C>
ORAL CONTRACEPTIVES

   Ovcon(R)35 and       Prevention of pregnancy                      Norethindrone and       U.S.
   Ovcon(R)50                                                        ethinyl estradiol

   Estrostep(R)         Prevention of pregnancy and treatment of     Norethindrone acetate   U.S.
                        moderate acne in women who desire oral       and ethinyl estradiol
                        contraception

   Loestrin(R)/         Prevention of pregnancy                      Norethindrone acetate   U.S., U.K.
   Minestrin(R)                                                      and ethinyl estradiol   and Canada

HORMONE THERAPY

   femhrt(R)            Treatment of moderate to severe              Norethindrone acetate   U.S. and
                        vasomotor symptoms and urogenital            and ethinyl estradiol   Canada
                        symptoms associated with menopause

   Estrace(R)tablets    Treatment of moderate to severe              17(beta) estradiol      U.S.
                        vasomotor symptoms and urogenital
                        symptoms associated with menopause

   Estrace(R)cream      Vaginal cream for treatment of vaginal and   17(beta) estradiol      U.S.
                        vulval atrophy

   Femring(R)/          Treatment of moderate to severe              Estradiol acetate       U.S. and
   Menoring(R)          vasomotor symptoms and urogenital                                    U.K
                        symptoms associated with menopause

PREMENSTRUAL DYSPHORIC
DISORDER (PMDD)

   Sarafem(R)           Treatment of premenstrual dysphoric          Fluoxetine              U.S.
                        disorder, a severe form of premenstrual      hydrochloride
                        syndrome

DERMATOLOGY

   Doryx(R)             Adjunct therapy for severe acne              Doxycycline hyclate     U.S.

   Dovonex(R)           Treatment of Psoriasis                       Calcipotriene           U.S.
</TABLE>

         In September 2003, we entered into a letter of intent with Barr giving
Barr an opportunity to acquire from us an exclusive license in the United States
and Canada to market, distribute and sell the currently marketed
Loestrin(R)/Minestrin(R) oral contraceptive products in connection with the
settlement of the patent litigation relating to Estrostep(R) and femhrt(R). See
"Item 8 - Legal Proceedings - Settlement with Barr Laboratories."

                                       13
<PAGE>

         We have a pipeline of products in development principally for the U.S.
market, including products utilizing the vaginal ring drug delivery technology.
See " -- Research and Development -- Research and Development Portfolio --
Vaginal Drug Delivery."

         In fiscal 2003, we commenced a program to expand our U.S. sales force
to approximately 400 representatives from 226 in fiscal 2002 and re-organized
our U.S. sales force into two teams, Warner Chilcott Women's Healthcare and
Warner Chilcott Specialty. We believe we have one of the largest women's
healthcare sales forces calling on physician specialists, including
obstetrician/gynecologists and dermatologists in the United States. Our sales
force of approximately 45 representatives in the United Kingdom and Ireland
market our product portfolio through direct contact with general practitioners,
community pharmacists and hospital consultants.

         Finished pharmaceutical products for our U.K. products business are
manufactured at facilities in Craigavon and Larne, Northern Ireland. Since the
sale of our Craigavon manufacturing facilities as part of the sale of our
Pharmaceutical Development, Manufacturing and Services ("PDMS") business in
December 2003, nearly all of our pharmaceutical products are manufactured for us
by third parties under supply agreements. Most of our U.K. pharmaceutical
products continue to be manufactured in Craigavon by the purchaser of the PDMS
business.

         During the year ended September 30, 2002 we sold our pharmaceutical
services businesses and since then our business consists of one operating
segment. The following table shows our revenue from continuing operations by
geographic origin.

<TABLE>
<CAPTION>
                        FOR THE YEARS ENDED SEPTEMBER 30,
                       ------------------------------------
                          2001         2002         2003
                       ----------   ----------   ----------
                                  (IN THOUSANDS)
<S>                    <C>          <C>          <C>
GEOGRAPHIC ORIGIN
United States          $  116,753   $  174,531   $  359,228
United Kingdom             63,349       58,993       64,893
All other                   3,720        1,697        8,141
                       ----------   ----------   ----------
Total                  $  183,822   $  235,221   $  432,262
                       ==========   ==========   ==========
</TABLE>

     Our shares are listed on both the London Stock Exchange and the Irish Stock
Exchange under the symbol "GAL". Our American Depositary Shares, each of which
represents four of our shares, are quoted on the NASDAQ(R) National Market under
the symbol "GALN".

PHARMACEUTICAL PRODUCTS

         Our pharmaceutical products business develops, supplies and markets
branded prescription pharmaceutical products in the United Kingdom, Ireland and
the United States and manufactures prescription pharmaceutical products in the
United Kingdom.

Women's Healthcare

         We develop and market products for a number of segments in the women's
healthcare therapeutic area, including oral contraceptives, hormone therapy and
premenstrual dysphoric disorder.

         Principal Products.

         Ovcon(R) 35 and Ovcon(R) 50. Ovcon(R) was introduced in the late 1970s.
We acquired the rights to these products from Bristol-Myers in February 2000. We
plan a late Spring 2004 launch for the Ovcon(R) 35 chewable tablet which
received final approval from the FDA in November 2003. Ovcon(R) 35 chewable
tablets is protected by a newly-issued U.S. patent covering chewable oral
contraceptives.

                                       14
<PAGE>

         Estrostep(R). Estrostep(R) is an oral contraceptive which is also
indicated for the treatment of moderate acne in women who desire oral
contraception and is targeted to younger patients (18-25 years). This product
was introduced in 2000. We acquired this product from Pfizer in March 2003.

         Loestrin(R). Loestrin is a low dosage oral contraceptive introduced in
1973. We acquired this product from Pfizer in March 2003. In September 2003, we
signed a letter of intent giving Barr an opportunity to acquire from us an
exclusive license in the United States and Canada to market, distribute and sell
the currently marketed Loestrin(R) and Minestrin(R) oral contraceptive products.

         femhrt(R). femhrt(R) was introduced in 2000. We purchased femhrt(R)
from Pfizer in April 2003.

         Estrace(R) tablets. Estrace(R) tablets are available in three doses and
was introduced in 1975. We acquired this product from Bristol-Myers in June
2001. We plan on launching a proprietary second generation tablet, Femtrace(TM),
as an alternative to Estrace(R) tablets, after FDA approval. The NDA for
Femtrace(TM), which contains estradiol acetate and delivers estradiol as its
active pharmaceutical ingredient, is pending before the FDA.

         Estrace(R) cream. Estrace(R) cream was introduced in 1984. We acquired
the rights to this product from Bristol-Myers in February 2000.

         Femring(R)/Menoring(R). We received final approval from the FDA in
March 2003 to market Femring(R) in the United States. Menoring(R) is marketed
exclusively in the United Kingdom. Femring(R) and Menoring(R) consist of a
vaginal ring containing a core of estradiol acetate which provides estradiol as
its active pharmaceutical ingredient.

         Sarafem(R). Sarafem(R) was introduced in 2000 and is available in two
dosages: 10 mg. and 20 mg. We purchased the U.S. sales and marketing rights to
Sarafem(R) from Lilly in January 2003.

Dermatology

         Principal Products.

         Doryx(R). We acquired the rights to distribute Doryx(R) in the United
States from Warner-Lambert Company ("Warner-Lambert") in June 1997 and in
September 1999 repositioned the product for the dermatology segment and directed
our sales force to promote Doryx(R) to targeted physicians. We launched the 75
mg. capsules in January 2002. We expect to submit an NDA to the FDA for a new
dosage form of Doryx(R) in early calendar 2004.

         Dovonex(R). In April 2003, we entered a co-promotion agreement with
Bristol-Myers for Dovonex(R) in the United States. Under the co-promotion
agreement, we have agreed to promote Dovonex(R) for Bristol-Myers, the current
exclusive licensee of this product in the United States. The term of the
co-promotion agreement ends December 31, 2007. Galen will be compensated by
Bristol-Myers for achieving sales of Dovonex(R) above agreed levels. In the
early years of the co-promotion, we do not anticipate significant revenues from
this product. Galen has an option to purchase Bristol-Myers's U.S. rights to
Dovonex(R) under pre-negotiated terms in January 2005 or January 2006 for a
purchase price of $250 or $200 million, respectively, plus a royalty, on net
sales of Dovonex(R) until the end of 2007, of 10% or 5%, respectively; however
Bristol-Myers can refuse to consummate the sale of its rights to Dovonex(R)
prior to January 2006. If Galen exercises its option after August 1, 2004 but on
or prior to August 1, 2005, Bristol-Myers is obliged to conclude the purchase
transaction in January 2006.

STRATEGY

         We intend to focus on growing our pharmaceutical products business both
organically and by acquisition. Our strategy for continued growth is composed of
three key elements:

         -    Continue organic growth of our pharmaceutical business;

         -    Development of new proprietary products; and

         -    Acquisition of products that complement and strengthen our
              existing product range.

                                       15
<PAGE>

         Continue Organic Growth. We seek to increase revenues of our
pharmaceutical products business through direct contact with targeted physicians
using our competitively scaled sales and marketing organization in the United
States.

         Development of New Proprietary Products. An important part of our
growth strategy is to expand our branded product portfolio through the
introduction of new proprietary products based on innovative formulations and
our drug delivery technology. Our intention is to focus on developing
improvements to existing therapies, including line extensions of our currently
marketed products, rather than on the more costly and time consuming process of
developing new chemical entities.

         Selective Acquisition of Products. We intend to pursue opportunities to
expand our pharmaceutical product portfolio by selectively purchasing
established branded products, particularly those products which are
non-strategic to the major pharmaceutical companies. We principally target those
products that complement our strategic focus on women's healthcare and
dermatology and which can be revitalized by our existing sales force.

RESEARCH AND DEVELOPMENT

         General

         Our research and development activity is focused on the development of
proprietary products in women's healthcare and dermatology. We also pursue the
development of products that are complementary to our product lines,
particularly line extensions of our existing branded products and new products
in our core therapeutic areas. Our strategy is to pursue products that represent
improvements to existing pharmaceuticals rather than create new chemical
entities. Improvements to existing products generally involve less development
and regulatory risk and shorter time lines from concept to market.

         During fiscal 2003, we invested $28.7 million in research and
development activities, a 45% increase over our prior year investment of $19.8
million, reflecting the activities associated with our efforts to obtain
regulatory approval for Femring(R) and Ovcon(R) 35 chewable tablets, preparing
our NDA submission for Femtrace(TM) as well as advancing our research and
development portfolio. Our research and development investment in fiscal 2001
totalled $13.7 million. As of September 30, 2003, our research and development
team consisted of 70 professionals. Our in-house expertise in product
development and regulatory affairs allows us to prepare and submit NDAs with the
FDA and other regulatory authorities for our own products.

         Research and Development Portfolio

         New Therapy

Dovobet(R). In April 2003, we entered into agreements with LEO Pharma relating
to the development and U.S. commercialization of Dovobet(R). Dovobet(R) is a
combination of the active agent in Dovonex(R) (calcipotriene) and the steroid
betamethasone dipropionate and gives us access to a new treatment for psoriasis.
An NDA for Dovobet(R) has not yet been submitted in the United States, however,
Dovobet(R) (also known in some countries as Daivobet(R)) has been approved and
is currently marketed in 23 countries. Under the terms of the Master Agreement,
Galen will pay LEO Pharma a final milestone payment of $40 million at the time
Dovobet(R) receives final FDA approval. Upon final FDA approval of Dovobet(R)
and the satisfaction of other conditions which are set forth in the agreements
filed as exhibits to this annual report, Galen will become the exclusive
licensee of Dovobet(R) in the United States, subject to the terms of a
pre-negotiated license and supply agreement.

         Line Extensions

         Ovcon(R) Contraceptive. During fiscal 2002, we submitted an NDA with
the FDA for our oral contraceptive product Ovcon(R) 35 chewable tablet. We
received final approval from the FDA in November 2003 and plan on launching the
new Ovcon(R) 35 chewable tablet product in late Spring 2004. The Ovcon(R) 35
chewable tablet product is protected by a newly-issued U.S. patent covering
chewable oral contraceptives.

                                       16
<PAGE>

         Femtrace(TM) tablets. We completed Phase III studies for
Femtrace(TM) tablets, our proprietary line extension for Estrace(R) tablets,
in fiscal 2003. An NDA for the product was accepted for filing by the FDA on
December 19, 2003.

         Doryx(R). Development is progressing on a new dosage form of Doryx(R).
We expect to submit an NDA to the FDA for the new dosage form in early calendar
2004.

         Vaginal Drug Delivery.

         In late 1989, we began to develop a vaginal ring, initially for use in
contraception. The vaginal ring consists of a silicone ring in which an active
ingredient is embedded or dispersed. The vaginal ring is capable of releasing
drug(s) at a relatively constant rate, which eliminates the peaks and troughs in
blood levels that may be associated with conventional forms of drug delivery
such as orally administered tablets. Vaginal delivery also avoids the first pass
metabolism of active ingredients, which can inhibit or preclude oral dosing of
certain drugs. The vaginal ring can be used for up to three months and does not
require fitting by a doctor. It therefore offers a potential compliance benefit
over existing prescribed therapies.

         Vaginal ring Product Pipeline. The following table shows our vaginal
ring product pipeline and related stage of development. We cannot guarantee that
any of these products will meet the clinical requirements or obtain the
requisite regulatory approvals to enable us to market them in the future.

<TABLE>
<CAPTION>
THERAPEUTIC APPLICATION       STATUS        MARKET
-----------------------       ------        ------
<S>                         <C>            <C>
Metronidazole               Phase III      E.U./U.S.
Testosterone                Phase II       E.U./U.S.
Contraceptive               Development    E.U./U.S.
</TABLE>

         Metronidazole. Our pharmaceutical research team is developing a vaginal
ring containing metronidazole, MetroRing(TM), for the local treatment of
bacterial vaginosis. This product entered Phase III in the United States in
November 2002, and we expect to submit an NDA in the second half of calendar
2004.

         Testosterone. A vaginal ring product is being developed to deliver
systemic doses of testosterone. Deficiency of testosterone in post-menopausal
women is postulated to be associated with decreased sexual motivation. Our
testosterone vaginal ring is aimed at addressing this problem. A Phase II trial
is currently in process.

         Contraceptive. We are developing an estrogen/progestin contraceptive
product. This product is in pharmaceutical development.

SALES AND MARKETING

         In fiscal 2003, we commenced a program to expand our U.S. sales force
to approximately 400 representatives from 226 in fiscal 2002 and re-organized
our U.S. sales force into two teams, Warner Chilcott Women's Healthcare and
Warner Chilcott Specialty. As of September 30, 2003, we employed approximately
345 sales representatives in the United States. As of the date of this report,
we have approximately 435 sales and marketing personnel in the United States and
55 sales and marketing personnel in the United Kingdom and the Republic of
Ireland.

         The predominant geographical focus for our pharmaceutical marketing
activities is the United States, which generated 83% of our revenue in fiscal
2003. We believe we have one of the largest sales forces targeted to promoting
women's healthcare and dermatology products to obstetrician/gynecologists in the
United States. Our sales force strategy is focused on employing precision
marketing techniques to market and promote our key branded products to high
volume prescribing physicians. These techniques require comprehensive internal
analysis of actual prescription data to determine the most effective allocation
of our sales and marketing resources and enable us to expand market share in
targeted markets. Our precision marketing team, together with their sales and
marketing colleagues, analyze prescription data and develop strategies and
tactics to maximize growth in our sales and market share. By employing

                                       17
<PAGE>

these marketing techniques, we have been able to sustain product growth,
revitalize acquired products and successfully launch new products in the United
States.

         In the United Kingdom, we have restructured our product range to focus
on women's healthcare products and the discontinuation and disposal of less
profitable non-core brands. Our United Kingdom and Ireland sales force directly
contacts general practitioners, community pharmacies and hospital consultants
throughout the United Kingdom and Ireland.

COMPETITION

         The pharmaceutical industry is highly competitive. Our branded products
compete with brands marketed by other pharmaceutical companies including large,
fully integrated concerns with financial, marketing, legal and product
development resources substantially greater than ours.

         The principal competitors in the women's health therapeutic category
are in the United States and include the women's healthcare divisions of Johnson
& Johnson, American Home Products, Pfizer, Schering, A.G. and Akzo-Nobel. The
principal competitors for our other products are Medicis, Quintiles, Pfizer and
Sanofi.

         In addition, third party healthcare payers, such as government bodies
and agencies, private health insurers and managed care organizations, are
increasingly challenging the pricing of pharmaceutical products and services and
reviewing their reimbursement practices. Many managed healthcare organizations
are now limiting the number of pharmaceutical products that are on their
formulary lists in an effort to control and reduce costs associated with patient
drug therapies. The resulting competition among pharmaceutical companies to
place their products on these formulary lists has created a trend of downward
pricing pressure in the industry.

         Our branded pharmaceutical products also are or may become subject to
competition from generic equivalents because there is no proprietary protection
for some of the branded pharmaceutical products we sell. Generic substitutes for
some of our branded pharmaceutical products are sold by other pharmaceutical
companies which claim that their products provide equivalent therapeutic
benefits at a lower cost. For instance, Estrace(R) tablets and Loestrin(R)
currently face generic competition, and although Estrace(R) tablets accounts for
approximately 13.5% of oral estrogen therapy products prescribed in the United
States, Estrace(R) tablets currently experiences a substitution rate in excess
of 90%, according to IMS Health, a market data provider. Typically, upon the
introduction of a generic version of a branded product, 90% or more of the
prescriptions written by authorized prescribers for the branded product may be
filled with a generic at the pharmacy, resulting in a commensurate loss in sales
of the branded product (substitution rates are lower for products which enjoy
greater brand loyalty, such as oral contraceptives). In addition, we have
entered into a letter of intent with Barr that would permit Barr to launch
generic versions of femhrt(R) and Estrostep(R) six months prior to patent expiry
in 2010 and 2008, respectively. Under a separate letter of intent, Barr would
grant Galen an option to acquire an exclusive license for Barr's generic version
of our currently marketed Ovcon(R) 35 oral contraceptive, which is not protected
by a patent or other exclusivity rights. These transactions are subject to
negotiation of definitive agreements, completion of due diligence and other
conditions, including antitrust review by the U.S. Federal Trade Commission. We
cannot assure you what effect, if any, these activities will have on our results
of operations. In addition, we are engaged in litigation to enforce the patent
for Sarafem(R). An adverse outcome in this litigation would permit the marketing
of generic competitors to Sarafem(R) which would likely have a material adverse
effect on our results of operations because the introduction of a generic
competitor to Sarafem(R) would likely drastically reduce sales of Sarafem(R). In
addition, legislation enacted in the United States allows, or, in a few
instances, in the absence of specific instructions from the prescribing
physician, mandates the use of generic products rather than brand name products.
This legislation and other pressure to reduce pharmaceutical costs may result in
pharmacists filling prescriptions for our branded products with generic
substitutes. Increased competition from the sale of competing generic
pharmaceutical products may cause a material decrease in revenue from our
branded pharmaceutical products.

         As the pharmaceutical industry is characterized by rapid product
development and technological change, our pharmaceutical products could be
rendered obsolete or made uneconomical by the development of new pharmaceuticals
to treat the conditions addressed by our products, technological advances
affecting the cost of production, or marketing or pricing actions by one or more
of our competitors. Our business, results of operations and financial condition
could be materially adversely affected by any one or more of these developments.
Our competitors may also be able to complete the regulatory process for new
products before we are able to do so and, therefore, may begin to market their

                                       18
<PAGE>

products in advance of our products. We believe that competition among both
branded and generic pharmaceuticals aimed at the markets identified by us will
be based on, among other things, product efficacy, safety, reliability,
availability and price. There can be no assurance that developments by others
will not render any product or technology we produce or may produce, obsolete or
otherwise non-competitive.

         Manufacturing, Supply and Raw Materials

         Most of our finished pharmaceutical products for the U.K. market are
manufactured at facilities in Craigavon and Larne, Northern Ireland. The
facilities in Craigavon were sold in December 2003 to a company controlled by
Dr. Allen McClay. The purchaser of the facility will continue to supply and
distribute Galen products currently manufactured in that facility under the
terms of a supply agreement. That supply agreement has a term of two years;
however, the supplier will have the opportunity to match the supply terms
offered by any proposed third party supplier of such products for periods
commencing after the expiration of the term. The principal components used in
the manufacture of our pharmaceutical products are active and inactive
pharmaceutical ingredients and certain packaging materials. We have multiple
sources for the majority of our raw materials for our U.K. products and select
most of our suppliers on the basis of competitive pricing. We believe that
adequate replacement sources are available to meet our U.K. pharmaceutical
product requirements at little or no incremental cost.

         Nearly all of our products are manufactured for us under contracts with
third parties. Accordingly, we are dependent upon our contract manufacturers for
the manufacture of our products. Their breach of their contractual obligations
could adversely affect us. We cannot assure you that our contract manufacturers
will be able to manufacture our products without interruption, that they will
comply with their obligations under our various supply arrangements, or that we
will have adequate remedies for any breach. In addition, their failure to comply
with regulatory requirements and to keep their facilities in good working order
could adversely affect the supply of products to us. To ensure their compliance,
we conduct quality assurance audits of our contract manufacturers' sites and
records to determine compliance with the relevant regulatory requirements.

         Bristol-Myers manufactures our Estrace(R) cream and Ovcon(R) oral
contraceptives under long-term supply agreements that run through February 2009.
Estrace(R) tablets are also manufactured for us by Bristol-Myers under a supply
agreement that runs through July 2006. Duricef(R) is manufactured for us by
Bristol-Myers under a supply agreement that runs through March 2007. Doryx(R) is
supplied to us by FH Faulding & Co Limited under a license and distribution
arrangement that runs through 2009 and is renewable thereafter. Sarafem(R) is
manufactured by Lilly pursuant to a three-year manufacturing agreement which
may, under certain circumstances, be extended for one additional year.
Estrostep(R) and Loestrin(R) are manufactured and femhrt(R) is packaged at
Pfizer's manufacturing facility in Fajardo, Puerto Rico. Galen has been granted
a right of first refusal on any future sale of this facility by Pfizer. This
right is exercisable until March 27, 2008. Femhrt(R) is manufactured under an
agreement between Warner-Lambert and Duramed Pharmaceuticals Inc. which has been
assigned to Galen by Warner-Lambert. We expect these products to account for a
significant percentage of our U.S. product sales in fiscal year 2004. In the
event that a supplier suffers an event that caused it to be unable to
manufacture our product requirements for a sustained period, the resulting
shortages of inventory could have a material adverse effect on our business.

         In the United States, the FDA must approve suppliers of certain
ingredients for our products and of finished product. The development and
regulatory approval of our U.S. products is dependent on our ability to procure
active ingredients, packaging materials and finished product from FDA-approved
sources. If pharmaceutical ingredients, packaging materials or finished products
were no longer available from an FDA-approved source, we would be required to
obtain FDA approval to change the supplier of that material or product. The
qualification of a new supplier could potentially disrupt the manufacture, and
therefore our supply of products for sale. Although we consider our sources of
supply to be adequate, and to date, no significant difficulty has been
encountered in obtaining product materials, there can be no assurance that we
will continue to be able to obtain materials and finished products as required.

     TRADEMARKS, PATENTS AND PROPRIETARY RIGHTS

         Protection of intellectual property, patents and trademarks is a key
company strategy for projects and new products of significant business
importance.

     Patents, Trade Secrets and Proprietary Knowledge

                                       19
<PAGE>

         We rely on patents, trade secrets and proprietary knowledge to protect
intellectual property. We generally seek to protect these items by filing
applications for patents on certain inventions, enforcing our legal rights
against third parties that we believe may infringe our intellectual property
rights, and entering into confidentiality, non-disclosure and assignment of
invention agreements with our employees, consultants, licensees and other
companies. For a discussion of certain legal proceedings relating to Sarafem(R)
see "Item 8 - Legal proceedings." We do not ultimately control whether our
patent applications will result in issued patents, whether we will be successful
in enforcing our legal rights against third party infringers, whether our
confidentiality, non-disclosure and assignment of invention agreements will not
be breached and whether we will have adequate remedies for any such breach, or
that our trade secrets will not otherwise become known by competitors. In
addition, most of our currently marketed branded pharmaceutical products are not
protected by patents and proprietary rights and therefore are or may become
subject to competition from generic equivalents. For a further discussion of our
competition, please see " -- Competition."

     Trademarks

         Due to our branded product focus, we consider our trademarks to be
valuable assets. Therefore, we actively manage our trademark portfolio, maintain
long-standing trademarks and obtain trademark registrations for new brands in
all jurisdictions in which we operate. The names indicated below are certain of
Galen's key registered trademarks, some of which may not be registered in all
jurisdictions:

<TABLE>
<S>                   <C>
Doryx(R)              Loestrin(R)
Estrace(R)            Ovcon(R)
Estrostep(R)          Sarafem(R)
femhrt(R)             Regurin(R)
Femring(R)            Warner Chilcott(R)
Kapake(R)
</TABLE>

         We also police our trademark portfolio against infringement. However,
our efforts may be unsuccessful against competitors or other violating entities
and we may not have adequate remedies for any breach because, for example, a
violating company may be insolvent.

     GOVERNMENT REGULATION

         Pharmaceutical companies operating in the United Kingdom and in the
United States are subject to regulatory controls governing the development,
manufacture, labeling, supply and marketing of their products.

         United Kingdom

         Obtaining a Marketing Authorization. No pharmaceutical product may be
marketed in the European Union without a marketing authorization. The United
Kingdom Medicines Act 1968 (the "Medicines Act") governs applications for
marketing authorizations for human use in the United Kingdom. The requirement
for obtaining and maintaining U.K. marketing authorizations largely originates
at a European level. Each time new legislation is introduced at the European
level in the form of a Directive, it is implemented in the United Kingdom
pursuant to the Medicines Act. As a result, the core rules in force in the
United Kingdom are essentially the same as those in force in other member states
of the European Union. In addition, individual member states of the European
Union may implement additional national legislation relating to, for example,
specific labeling requirements, the regulation of pharmaceutical prices and
third party reimbursement of pharmaceutical products.

         Registration Systems. Three principal systems exist in the European
Union for registering pharmaceutical products: the national system, the mutual
recognition system and the centralized system.

         The national system involves the submission of a marketing
authorization application to one member state of the European Union. When a
company wishes to apply for marketing authorizations in more than one European
Union state, either the mutual recognition (decentralized) procedure or the
centralized procedure must be used (as appropriate).

                                       20
<PAGE>

         The mutual recognition procedure works on the principle of the mutual
recognition by EU member states of their respective national marketing
authorizations. Under the procedure, an applicant may seek to have an existing
authorization recognized by one or more other member states selected by the
applicant. The applicant must submit identical applications to the relevant
member states and all member states must be notified of them. As soon as one
member state decides to evaluate the medicinal product, it then becomes the
"reference member state" ("RMS") and notifies the other member states to which
the application has been sent ("concerned member states" ("CMSs")). The RMS then
sends a detailed assessment report to all member states who have 90 days to
recognize the decision of the RMS. If the original national marketing
authorization is not mutually recognized by another member state, the points in
dispute are referred to the EMEA's Committee for Proprietary Medicinal Products
("CPMP") for arbitration. The CPMP opinion is forwarded to the European
Commission which makes the final decision. Once the Commission decision is
taken, it is binding on all CMSs. Other member states, not directly concerned at
the time of the decision, are also bound as soon as they receive a marketing
authorization application for the same product.

         The centralized system is a process for which there is a single
application, a single evaluation and a single authorization for medicinal
products. This system applies only to certain types of applications (compulsory
for biotechnology products and optional for certain other products, including
new chemical entities not previously authorized in the European Union, medicinal
products administered by significantly innovative and novel delivery systems and
significant new indications for existing products). The process is administered
by the European Agency for the CPMP, although the CPMP outsources the actual
assessment of an application for a marketing authorization to experts in an EU
member state and the final decision whether to grant an authorization is made by
the European Commission. A marketing authorization granted pursuant to the
centralized procedure, is recognized in all European Union member states. As
with the mutual recognition system, a specific timetable is specified for
evaluation of the application, including allowances for appeals.

         The European Agency for the Evaluation of Medicinal Products (the
"EMEA") was established by Council Regulation EEC 2309/93 of July 1993 with
effect from January 1, 1995. The EMEA is responsible for coordinating the
evaluation and supervision of medicinal products for both human and veterinary
use across the European Union. The EMEA's opinion forms the basis for the
European Commission's authorization of the marketing of a product approved by
the centralized system. As described above, the CPMP (the EMEA's Committee for
Proprietary Medicinal Products) also arbitrates between member states of the
European Union on other medicinal products submitted under the mutual
recognition procedure. The EMEA comprises a management board, three committees
of scientific experts responsible for preparing the EMEA's opinion (one for
medicinal products for human use, one for medicinal products for veterinary use
and one for the designation of "orphan drugs" for rare diseases), an executive
director and a permanent secretariat.

         Criteria Assessed in Obtaining a Marketing Authorization. European
Directive 2001/83/EC sets out the basic principles for the regulation of
marketing of medicinal products within the European Union. The criteria for the
grant of a marketing authorization are quality, safety and efficacy. In order to
demonstrate these criteria, a wide range of information and data are required to
be submitted to the relevant regulatory authority. Any application for a
marketing authorization must be accompanied by, among other things, the results
of:

         -    physicochemical, biological or microbiological tests (establishing
              the quality of the products);

         -    pharmacological and toxicological tests (establishing the safety
              of the product); and

         -    clinical trials (studies in humans establishing efficacy and
              safety, described further below).

         The quality of the product is determined by laboratory studies and
tests. These verify both the chemical constitution and stability of the product
as well as the manufacturing processes used.

         The safety of the product is initially determined by studies to show
matters such as toxicity, the effect on reproductive potential, adverse effects
on genes, whether the product has the ability to cause cancer, how the product
is distributed within the body, how quickly the body eliminates the product and
the product's interaction with other body chemicals.

         The efficacy and safety of the product are derived from clinical trials
with volunteers and patients. Clinical trials are generally classified into
Phases I through IV, although there are not always distinct divisions between
each phase.

                                       21
<PAGE>

         Phase I clinical trials are normally conducted in healthy human
volunteers. The purpose of the trial is to obtain a preliminary evaluation of a
product's safety, its pharmacokinetic profile and its biological effect on
humans.

         Phase II clinical trials assess the product for its short-term safety
and preliminary efficacy in a limited number of patients. Later Phase II trials
may be comparative (e.g. comparing the product with a placebo). The appropriate
dose ranges and regimens for Phase III (safety and efficacy) trials are also
determined during this Phase.

         Phase III clinical trials are a comprehensive evaluation of safety and
efficacy of the product based upon larger patient groups. The pattern and
profile of the more frequent adverse reactions are investigated in detail and
special features of the product are explored.

         Phase IV clinical trials are studies performed after a marketing
authorization has been granted. They are designed to monitor drug use in the
normal patient population. These studies are usually larger in scale and focus
on efficacy in clinical practice and side effects.

         In certain well-defined situations, the results of pharmacological and
toxicological tests and clinical trials do not have to be provided, thus
allowing for "abridged" applications. Directive 2001/83/EC provides for abridged
applications in three defined cases:

         -    where the medicinal product is essentially similar to a medicinal
              product authorized in the member state concerned by the
              application and the holder of the marketing authorization for the
              original medicinal product has consented to the use of its data
              for the purpose of examining the application in question; or

         -    where the constituent or constituents of the medicinal product
              have a well established medicinal use, with recognized efficacy
              and safety demonstrated by detailed references to published
              scientific literature; or

         -    where a medicinal product, which is essentially similar to a
              medicinal product that has been authorized in the European Union
              for six to ten years depending on the product and the member state
              concerned) and is marketed in the member state concerned where
              consent to refer to the first applicant's data has not been given.

         The EMEA has formulated numerous guidelines to provide guidance on
existing European Directives relating to safety, quality and efficacy. In
addition, we, along with other companies in Europe, operate within a system of
good practice procedures which are standards by which laboratory studies,
manufacturing procedures, clinical trials and regulatory processes are
conducted.

         A marketing authorization may be submitted when appropriate data are
available. The submission of an application to a regulatory authority does not
guarantee that a marketing authorization for the product will be granted by that
regulatory authority. Furthermore, each regulatory authority may impose its own
requirements and may refuse to grant or may require additional data before an
approval, even though the relevant product may have been approved by authorities
in other countries. The time taken to obtain approvals in individual countries
varies, but can take from a few months to several years from the date of
application. The trend over the years has been towards greater regulation.
Marketing authorizations are granted subject to certain generally applicable
conditions and may also be subject to product specific restrictions determined
by regulatory authorities.

         Maintenance of Marketing Authorizations. A U.K. marketing authorization
is granted for five years and is renewable for five-year periods thereafter.
However, regulatory authorities have the power to amend, suspend or revoke a
marketing authorization at any time if they are no longer satisfied as to the
product's safety, quality or efficacy. In addition, the holder of the marketing
authorization remains obligated to ensure that the product keeps pace with the
state of scientific and technical knowledge in terms of its production and
control and to review and report adverse events to the relevant authority. As a
result, the holder of a marketing authorization may also seek to amend that
marketing authorization. Any changes made to the authorization must be approved
by the relevant regulatory authority by way of variation applications before the
changes can be implemented by the holder of the marketing authorization.

         The Role of the U.K. National Health Service. Pharmaceutical products
with a publicly funded marketing authorization and requiring a prescription in
order to be dispensed may be prescribed other than through the U.K. National
Health Service ("NHS") but the vast majority of prescription-only medicines are
prescribed under NHS

                                       22
<PAGE>

prescriptions. The price the NHS pays for branded (as opposed to generic)
products prescribed is determined by the Pharmaceutical Price Regulation Scheme
(described below).

         In 1999, the National Institute for Clinical Excellence ("NICE") was
established to, among other things, assess the clinical and cost effectiveness
of medicinal and other health products referred to it for appraisal. The outcome
of an appraisal is a recommendation from NICE as to whether the product(s)
appraised ought to be prescribed on the NHS (i.e., at public expense) in England
and Wales and, if so, in what circumstances. Technologies and products for
review are selected by the U.K. Department of Health or the devolved Welsh
executive and are assessed by a NICE Appraisals Board, a body of clinicians and
scientific experts, on the basis of representations made by the manufacturer,
patient groups and other interested parties selected as consultees. It is highly
unlikely that a product which is not recommended by the Appraisals Board as
being cost effective will be prescribed in significant numbers via the NHS in
England and Wales. In Scotland, the cost effectiveness of medicinal products is
assessed by NHS Quality Improvement Scotland on the basis of NICE's appraisals.
NHS Quality Improvement Scotland then makes its own recommendations as to
whether a relevant product is cost effective for prescription by the NHS in
Scotland. Separate recommendations as to a product's efficacy are made by the
Scottish Medicines Consortium. In Northern Ireland, individual health
authorities make their own decisions as to the cost effectiveness of medicinal
products, although NICE's recommendations are influential.

         Pharmaceutical Price Regulation Scheme. Companies that sell branded
products to the NHS for dispensing by prescription may elect to join the
Pharmaceutical Price Regulation Scheme, or PPRS, and, in practice, the suppliers
of most drugs purchased by the NHS do so. The PPRS is administered by the U.K.
Department of Health and the present scheme operates for a period of at least
five-years from October 1, 1999. Under the scheme, companies are generally
permitted to earn a return on capital employed on branded products sold to the
NHS for dispensing by prescription. In order to determine the return on capital
employed, a company is required to supply certain financial information to the
U.K. Department of Health each year in an amount and level of detail based upon
a company's level of sales to the NHS.

         However, the U.K. Department of Health has the right to call for a full
financial return from any company if the circumstances appear to warrant it.

         Under the current PPRS, the prices of pharmaceuticals covered by it
were generally cut by 4.5%. Prices may be increased by agreement with the U.K.
Department of Health if the company requesting the increase meets certain
specified criteria.

         United States

                  FDA and other Regulatory Requirements. Since the acquisition
of Warner Chilcott, we have become increasingly subject to the regulatory
oversight of the FDA and other regulatory agencies.

                  The research, development and commercial activities relating
to prescription pharmaceutical products are subject to extensive regulation by
the FDA. Most pharmaceutical products are subject to rigorous preclinical
testing and clinical trials and to other approval requirements under the Federal
Food, Drug and Cosmetic Act, or FDCA, and the Public Health Services Act. In
addition, manufacturers of approved drugs must comply with current Good
Manufacturing Practices, or cGMP. Manufacture and disposal of pharmaceutical
products in the United States is also regulated by the Environmental Protection
Agency.

                  The FDCA, the Public Health Act, the Controlled Substances
Act, and other federal statutes and regulations govern or influence many aspects
of our business in the United States. All pharmaceutical marketers are directly
or indirectly (through third parties) subject to regulations that cover the
manufacture, testing, storage, labeling, documentation/record keeping, approval,
advertising, promotion, sale, warehousing, and distribution of pharmaceutical
drug products. Non-compliance can result in fines and judicially imposed
sanctions, including product seizures, injunctive actions and criminal
prosecutions. In addition, administrative or judicial actions can result in the
recall of products and the total or partial suspension of manufacture and/or
distribution. The government can also refuse to approve pending applications or
supplements to approved applications. The FDA also has the authority to withdraw
approvals of drugs in accordance with statutory due process procedures.

                                       23
<PAGE>

                  FDA approval is required before any dosage form of any
unapproved drug, including a generic equivalent of a previously approved drug,
can be marketed. Certain drugs are not considered by the FDA to be "new" drugs
and fall outside of the typical FDA pre-marketing approval process. These drugs,
referred to as "grandfathered" products, generally were in use prior to the
enactment of the FDCA. Several of the products acquired by us in the Warner
Chilcott transaction are being marketed in the United States in reliance upon
their grandfathered status. In addition, Warner Chilcott has identified
grandfathered drugs as a potential source of opportunities to develop and launch
new products. The FDA has expressed the view that all prescription drugs should
ultimately be subject to pre-market clearance requirements. If the FDA adopts
this stance it could potentially affect products currently, or proposed to be,
marketed as grandfathered drugs. The FDA regulations require post-marketing
reporting of adverse drug events of the drug product. The FDA may, at any time,
take action to modify and restrict the drug's product labeling or withdraw
approval of the product should new information come to light about the safety of
the drug product.

                  The FDA regulates post-approval advertising and promotional
activities to assure that these activities are being conducted in conformity
with statutory and regulatory requirements. Failure to adhere to these
requirements could result in regulatory actions that could have an adverse
effect on our U.S. business, results of operations, and financial condition.

                  Manufacturers of marketed drugs must comply with current Good
Manufacturing Practice regulation and other applicable laws and regulations
required by the FDA, the Environmental Protection Agency and other regulatory
agencies. Failure to do so could lead to sanctions, which may include an
injunction suspending manufacturing, the seizure of drug products and the
refusal to approve additional marketing applications.

                  Other U.S. Regulation. The Prescription Drug Marketing Act, or
PDMA, which amends various sections of the FDCA, imposes requirements and
limitations upon drug sampling and prohibits states from licensing wholesale
distributors of prescription drugs unless the state licensing program meets
certain federal guidelines that include, among other things, minimum standards
for storage, handling and record keeping. The PDMA also sets forth civil and
criminal penalties for violations of these and other provisions. The FDA and the
states are still implementing various sections of the PDMA.

                  Medicaid, Medicare and other reimbursement legislation or
programs govern reimbursement levels, including requiring that all
pharmaceutical companies rebate to individual states a percentage of their
revenues arising from Medicaid-reimbursed drug sales. We believe that the U.S.
federal and/or state governments may continue to enact measures in the future
aimed at reducing the cost of prescription drugs to the public.

                  We are subject to U.S. federal, state and local laws in the
jurisdictions in which we operate, such as laws regulating working conditions.
In addition, we may be subject to some liability for compliance with
environmental laws by third party manufacturers of its products.

                  Products marketed outside of the United States that are
manufactured in the United States are subject to certain FDA regulations, as
well as regulation by the country in which the products are sold. While we do
not currently have plans to market any of our U.S. products in other countries,
we may do so from time to time.

  SEASONALITY

         Our pharmaceutical products business is minimally affected by seasonal
factors.

                                       24
<PAGE>

  C. ORGANIZATIONAL STRUCTURE

         The following is a list of our significant subsidiaries, as of
September 30, 2003, their country of incorporation and their principal activity.
Each of these entities is a wholly-owned subsidiary of Galen Holdings.

<TABLE>
<CAPTION>
       Subsidiary                Principal Activity        Country of Incorporation
-------------------------  ------------------------------  ------------------------
<S>                        <C>                             <C>
Galen Limited              Pharmaceutical research and
                           development, manufacturing and  Northern Ireland
                           marketing

Galen (Chemicals) Limited  Pharmaceutical sales and        Republic of Ireland
                           distribution

Warner Chilcott Inc.       Pharmaceutical development,     United States
                           marketing and distribution
</TABLE>

  D. PROPERTY, PLANT AND EQUIPMENT

  We have a 106,000 sq. ft. MHRA and FDA approved facility in Larne, Northern
Ireland dedicated to the manufacture of our vaginal rings as well as our sterile
product range. The Larne facility also houses pharmaceutical research and
development facilities. We lease approximately 42,000 sq. ft. of office space in
Rockaway, New Jersey, where our U.S. operations are headquartered. Galen also
currently leases 16,500 sq. ft. of office space in Craigavon for our
administration, regulatory compliance, sales and marketing activities for the
United Kingdom and Ireland.

         During fiscal 2003, our facilities in Craigavon, totaling 140,000 sq.
ft., manufactured tablet and capsule formulations, as well as sacheting powders
and granules. Dedicated suites for the manufacture of cephalosporin and
penicillin antibiotic products were also located at Craigavon. In December 2003,
the Craigavon facility was sold as part of the Pharmaceutical Development and
Manufacturing Services business to a company controlled by Dr. Allen McClay. All
of the Company's products manufactured in Craigavon will continue to be
manufactured at that facility by the purchaser pursuant to a supply agreement.

         During the year ended September 30, 2002, in connection with the
disposal of our pharmaceutical services businesses, we sold our pharmaceutical
services facilities. See "Item 4. Information on the Company."

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS.

  A. OPERATING RESULTS

  GENERAL

         The following discussion and analysis of financial condition and
results of operations of Galen should be read in conjunction with the selected
financial information of Galen, the consolidated financial statements for the
fiscal years 2001, 2002 and 2003 together with the notes to the consolidated
financial statements, as well as the business description included in this
annual report. The financial data analyzed in this discussion has been prepared
in accordance with U.S. GAAP. In addition, the following discussion does not
include the results from our discontinued operations, unless otherwise
indicated.

  OVERVIEW

                                       25
<PAGE>

         For the period under review, our consolidated results of operations
should be considered in light of the following specific factors.

         Effect of the Acquisition of Warner Chilcott. On September 29, 2000, we
acquired Warner Chilcott, a U.S. based developer and marketer of branded
prescription pharmaceutical products for $325.5 million. The acquisition,
accounted for as a purchase, has and will continue to affect our results of
operations. We recognized goodwill in the amount of $212.1 million. Pursuant to
SFAS 142, the Company's goodwill is no longer amortized effective October 1,
2001. We recognized intangible assets in the amount of $199.9 million related to
the Ovcon(R) 35, Ovcon(R) 50 and Estrace(R) cream products of Warner Chilcott
together with $20.9 million attributed to the value of core developed
technology, and we amortize these amounts over a period of 20 years.

         In February 2000, Warner Chilcott, Inc. issued $200 million principal
amount of 12 5/8% senior notes due 2008 ("Notes"). After certain noteholders
exercised their repurchase rights in connection with our acquisition of Warner
Chilcott, $159.7 million of senior notes remained outstanding. During the year
ended September 30, 2002, we repurchased $111.3 million of principal amount of
senior notes in privately negotiated transactions, and an additional $2.9
million of principal amount in the year ended September 30, 2003. As of
September 30, 2003, the principal amount of senior notes outstanding amounted to
$45.5 million. Under the terms of the indenture, Warner Chilcott is permitted to
redeem the senior notes on or after February 15, 2004. On December 18, 2003,
Warner Chilcott gave notice to the trustee under the indenture of its intention
to redeem all of the outstanding senior notes on February 14, 2004.

         Effect of Acquisitions and Disposals. We have expanded our portfolio of
branded pharmaceutical products since we acquired Warner Chilcott in 2000. As a
result of these product acquisitions, we have recognized intangible assets
totaling approximately $796 million. We are amortizing this amount over 20
years, which has the effect of reducing our net income accordingly. We may
acquire additional products in the future. We also disposed of our CSS business
in December 2001, CTS business in May 2002, ICTI business in August 2002 and
therefore no longer have any pharmaceutical services businesses. The following
discussion does not include the results from these discontinued businesses
unless otherwise indicated. A description of these acquisitions and disposals
may be found under "Item 4: Information on the Company." A consequence of our
recent acquisitions is that our results of operations may not be comparable to
prior year periods.

CRITICAL ACCOUNTING POLICIES

         The preparation of our financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. We believe the following critical accounting policies affect our
more significant judgments and estimates used in the preparation of our
consolidated financial statements. Our significant policies are described in
Note 1 to the consolidated financial statements included in Item 18 of this
annual report.

         Impairment of Goodwill

         We periodically evaluate acquired businesses for potential impairment
indicators. Our judgments regarding the existence of impairment indicators are
based on legal factors, market conditions and operational performance of our
business. We carry out an annual impairment review of goodwill unless events
occur which trigger the need for an earlier impairment review. We have completed
our annual impairment test as of June 30, 2003 and have determined that goodwill
has not been impaired. Future events could cause us to conclude that impairment
indicators exist and that goodwill associated with our business is impaired. Any
resulting impairment could affect our financial condition and results of
operations.

         Impairment of Definite Lived Intangible Assets

         We assess the impairment of definite lived intangible assets whenever
events or changes in circumstances indicate that the carrying value may not be
recoverable. Factors which we consider could trigger an impairment review
include, but are not limited to, the following: (i) significant negative
industry or economic trends; and (ii) current, historical or projected losses
that demonstrate continuing losses. When we determine that there is an indicator
that the carrying value of definite lived intangible assets may not be
recoverable, we measure impairment based on estimates of future

                                       26
<PAGE>

cashflow. These estimates include assumptions about future conditions within the
Company and the industry. If actual cashflows differ from those projected by
management, additional write-offs may be required.

         Allowance for Doubtful Accounts

         We record an allowance for estimated bad debts included in our accounts
receivable. This allowance is determined based on our historical collection and
write-off experience. An allowance is also made for customer accounts for which
we believe that collectibility is doubtful. Management's judgment is a key
factor in determining this allowance and, as such, additional allowances may be
required.

         Inventory

         Our inventory is stated at the lower of cost or net realizable value.
Cost is determined on a first in, first out basis and includes transportation
and handling costs. In the case of manufactured products, cost includes
material, labor and applicable manufacturing overheads. Provisions are made for
obsolete, slow moving or defective items where appropriate. The provisioning
process requires the use of management's judgment.

RESULTS OF OPERATIONS

Years Ended September 30, 2003 and 2002

Revenue. Revenue from continuing operations of $432.3 million for the year ended
September 30, 2003 (fiscal 2003) increased $197.0 million, or 84%, from $235.2
million for the year ended September 30, 2002 (fiscal 2002). Our continuing
operations represent our pharmaceutical products business, which includes the
development, promotion and sale of branded prescription products in the United
States, United Kingdom and the Republic of Ireland. Approximately 83% of our
fiscal 2003 revenue from continuing operations was generated in the United
States. A significant part of the increase in our revenue from continuing
operations was the result of our newly acquired products. The following table
summarizes our product revenue for our newly acquired products and for our other
important products (in millions):

<TABLE>
<CAPTION>
                     YEAR ENDED
                  SEPTEMBER 30, 2003
                  ------------------
<S>               <C>
Doryx(R)              $     54.1
Estrace(R)cream             44.8
Estrostep(R)                26.5
femhrt(R)                   22.6
Femring(R)                   2.3
Loestrin(R)                 34.9
Ovcon(R)                    58.6
Sarafem(R)                  59.9
All other                  128.6
                      ----------
                      $    432.3
                      ==========
</TABLE>

Although revenue from our newly acquired products significantly contributed to
our increased revenue in fiscal 2003, revenues for our existing products
promoted by our sales force increased as well. Revenues for Ovcon(R), Estrace(R)
cream and Doryx(R) increased by 27% compared to fiscal 2002. In January 2003, we
acquired the U.S. sales and marketing rights to Sarafem(R) from Lilly for cash
consideration of approximately $295 million. Sarafem(R) is a treatment for
premenstrual dysphoric disorder, a severe form of premenstrual syndrome. In
March 2003, we acquired two oral contraceptives, Estrostep(R) and Loestrin(R),
from Pfizer, Inc. for an initial cash consideration of approximately $197
million. We acquired femhrt(R) in April 2003 for an initial cash consideration
of approximately $162 million. femhrt(R) is a continuous estrogen-progestogen
therapy. No revenue for these newly acquired products was recorded in fiscal
2002. In June 2003, we launched Femring(R), our vaginal ring for estrogen
therapy.

                                       27
<PAGE>

Gross profit and gross margin. Gross profit of $359.6 million for fiscal 2003
increased $175.9 million, or 96%, from $183.7 million in fiscal 2002. Our gross
margin was 83% in fiscal 2003 compared to 78% in fiscal 2002. These improved
results correspond with the increase in revenues from our branded pharmaceutical
products in the United States.

Selling, general and administrative expenses. Selling, general and
administrative expenses of $135.9 million increased $71.3 million, or 111%, from
$64.5 million in fiscal 2002 primarily due to increased selling, advertising and
promotion costs incurred as we expanded our sales force and increased spending
on promoting our broadened product portfolio. Included in the increase in our
promotion and advertising costs is $21.4 million associated with our June 2003
U.S. launch of Femring(R). The average number of representatives on our sales
force in fiscal 2003 was 328, an increase of 26% as compared to the fiscal 2002
average of 261. As of September 30, 2003 we had approximately 390 sales
representatives.

Research and development. Research and development expenses of $28.7 million
increased $8.9 million, or 45%, from $19.8 million in fiscal 2002 reflecting our
ongoing investment in our pipeline of products. During fiscal 2003, we received
final approval from the FDA for Femring(R), and we completed work on the NDA for
our oral estradiol acetate product, Femtrace(TM), for the treatment of the
symptoms of menopause. The NDA for Femtrace(TM) was accepted for filing by the
FDA on December 19, 2003. In November 2003, we received final FDA approval for
our new Ovcon(R) 35 chewable tablet product. We expect to submit an NDA for our
Doryx(R) line extension in early calendar 2004 and an NDA for MetroRing(TM) in
the second half of calendar 2004. Also in fiscal 2003, we received final
approval by the FDA for Femring(R), our first vaginal ring product to be
approved in the United States. We received final FDA approval for our new
Ovcon(R) 35 chewable tablet product in November 2003.

Depreciation and amortization. Depreciation expense of $6.8 million increased
$1.5 million, or 29%, from $5.3 million in fiscal 2002 resulting from
investments in property, plant and equipment in the ordinary course.
Amortization expense of $42.3 million increased $22.8 million, or 117%, from
$19.5 million in fiscal 2002. This increase was primarily due to the
amortization of Estrostep(R) and Loestrin(R) acquired in March 2003, femhrt(R)
acquired in April 2003, the U.S. sales and marketing rights to Sarafem(R)
acquired in January 2003, and Duricef(R) and Moisturel(R) acquired in March
2002.

Interest income and interest expense. Interest income of $3.2 million decreased
$7.6 million, or 71%, from $10.8 million in fiscal 2002 as funds on hand were
significantly less during fiscal 2003. During the second and third quarters of
fiscal 2003, we acquired femhrt(R), Estrostep(R), Loestrin(R) and the U.S. sales
and marketing rights for Sarafem(R) for a total of approximately $650 million.
These transactions were financed from cash on hand and the drawdown of
approximately $350 million in long-term debt, under our $450 million credit
facility put in place during the second quarter of fiscal 2003. Interest expense
of $11.3 million decreased $18.4 million, or 62%, from $29.7 million in fiscal
2002. This decrease was primarily due to net costs of $13.2 million, associated
with our early retirement of debt, which are included in our results for fiscal
2002. These costs were the result of our fiscal 2002 purchase of $111.3 million
principal amount of the Notes acquired as part of the Warner Chilcott
transaction. In fiscal 2003, we purchased an additional $2.9 million principal
amount of Notes, and recorded net costs of $0.2 million. We purchased the Notes
in privately negotiated transactions. The average principal amount outstanding
during fiscal 2002 was $111.4 million, compared to a balance of $48.2 million
during fiscal 2003. The reduction in interest charges related to our purchase of
the Notes more than offset the interest expense associated with our fiscal 2003
drawdown of approximately $350 million in debt under our credit facility, having
the effect of further lowering our interest charges in fiscal 2003 as compared
to fiscal 2002.

Provision for income taxes. Taxes of $41.7 million increased $23 million from
$18.7 million in fiscal 2002. We operate primarily in three tax jurisdictions,
the United Kingdom, the United States and the Republic of Ireland. In the United
Kingdom the statutory rate was 30% in both fiscal 2003 and 2002. The federal
statutory rate in the United States was 35% in both fiscal 2003 and 2002. In the
Republic of Ireland, the statutory rate was 13% in fiscal 2003 and 17% in fiscal
2002. Our effective tax rate was 30% in fiscal 2003, compared to 33% in fiscal
2002, the decrease reflecting the lower tax rates in the Republic of Ireland.

Discontinued Operations. Our discontinued operations represented our
pharmaceutical services businesses, which were ICTI (sold as of August 23,
2002), CTS (sold as of May 31, 2002) and CSS (sold as of December 31, 2001). In
fiscal 2002, we reported a gain of $101.1 million, net of taxes of $3.9 million,
representing the sale of these businesses. Also

                                       28
<PAGE>

included in our results was income from discontinued operations of $7.0 million,
net of taxes of $2.2 million, representing results for ICTI, CTS and CSS through
their respective dates of sale. No results for discontinued operations were
recorded for fiscal 2003 as our discontinued operations were disposed of in
entirety by the end of our fiscal year 2002.

Net income. Due to the factors set forth above, we reported net income of $96.2
million as compared to $145.2 million in fiscal 2002. Our discontinued
operations, including the gain on disposal, accounted for $108.1 million of our
net income for fiscal 2002. Net income per ADS was $2.10 (basic) and $2.09
(diluted), compared to $3.13 (basic) and $3.12 (diluted) in fiscal 2002. The
weighted average number of ADS equivalent shares outstanding decreased by 0.4
million due to our repurchase of 0.5 million ADS equivalents in the last quarter
of fiscal 2002. Our Board of Directors recommended the payment of a final
dividend of 2.4 pence per ordinary share, a 20% increase over fiscal 2002,
making the total dividend for fiscal 2003 3.6 pence per ordinary share compared
to 3.0 pence per ordinary share in fiscal 2002.

Years Ended September 30, 2002 and 2001

Revenue. Revenue from continuing operations of $235.2 million for the year ended
September 30, 2002 (fiscal 2002) increased 28%, or $51.4 million, from $183.8
million for the year ended September 30, 2001 (fiscal 2001). Our continuing
operations represent our pharmaceutical products business, which includes the
development, promotion and sale of branded prescription products in the United
States, United Kingdom and Ireland. 74% of our fiscal 2002 revenue from
continuing operations was generated in the United States, compared to 64% in
fiscal 2001.

Our top three performing products, Ovcon(R), our oral contraceptive, Estrace(R)
cream, for local treatment of urogenital symptoms associated with menopause, and
Doryx(R), our pelletized oral formulation of doxycycline for the treatment of
acne, continued to grow during fiscal 2002. Contributing to the growth was our
launch in January 2002 of our new 75 mg. dosage strength for Doryx(R) to
complement our successful Doryx(R) 100 mg. product. During fiscal 2002, we
further expanded our portfolio of products marketed to the dermatologist in the
United States with our acquisition of Duricef(R) and Moisturel(R) in March 2002.
Sales for Estrace(R) tablets, acquired in June 2001, were recorded for a full
year in fiscal 2002 and for our final quarter in fiscal 2001.

Gross profit and gross margin. Gross profit of $183.7 million for fiscal 2002
increased 32%, or $44.1 million from $139.6 million in fiscal 2001. These
improved results reflect the significant increase in our revenues from our high
margin pharmaceutical products in the United States. Our gross margin increased
from 76% in fiscal 2001 to 78% in fiscal 2002.

Selling, general and administrative. Selling, general and administrative
expenses of $64.5 million were consistent with fiscal 2001. Increased selling
and promotion costs of $11.4 million in support of our product portfolio and
newly launched products, were offset primarily by foreign currency gains.

Research and Development. Our research and development expenses of $19.8 million
increased 45%, or $6.1 million, from $13.7 million in fiscal 2001 as we
continued to increase our investment in our pharmaceutical product portfolio.
Our activities were focused on the development of proprietary products for
marketing in the United States, based on the vaginal ring. We also pursued new
products and line extensions of our branded products that would complement and
strengthen our existing product line. During fiscal year 2002, we submitted NDAs
with the FDA for our vaginal ring estrogen therapy (Femring(R)) and our new
Ovcon(R) 35 chewable tablet product. In fiscal 2002, we worked on our
proprietary line extension for Estrace(R) tablets (Femtrace(TM)) and the NDA for
this product was accepted for filing by the FDA on December 19, 2003. Our
activities also included the development of other vaginal ring applications for
the treatment of sexual dysfunction and local infection.

Depreciation and amortization expense. Depreciation expense of $5.3 million for
fiscal 2002 increased $1.0 million from $4.3 million in fiscal 2001. This
increase was the result of our continued investment in our property, plant and
equipment. Amortization expense of $19.5 million decreased 26%, or $6.7 million,
from $26.2 million in fiscal 2001. Effective October 1, 2001, we ceased
amortizing our goodwill due to our adoption of Statement of Financial Accounting
Standards No. 142, Goodwill and Other Intangible Assets. The resulting reduction
in amortization expense of $13.6 million was significantly offset by the
increase in amortization expense associated with our acquisition of Duricef(R)
and Moisturel(R) in March 2002 and Estrace(R) tablets in June 2001.

                                       29
<PAGE>

Interest income and interest expense. Interest income of $10.8 million for
fiscal 2002 increased 71%, or $4.5 million, from $6.3 million in fiscal year
2001 as average funds held for investment were higher during fiscal 2002 than in
fiscal 2001. Funds held for investment were most significantly increased as a
result of our July 2001 equity offering from which we raised approximately $268
million in net proceeds and, more recently, as a result of our sale of our
services businesses for which we received approximately $229 million (net of
costs). Interest expense of $29.7 million increased 33%, or $7.3 million, from
$22.4 million in fiscal 2001 due to our purchase of a portion of the Notes
acquired as part of the Warner Chilcott transaction. During fiscal 2002, we
purchased in privately negotiated transactions a total of $111.3 million
principal amount of Notes, and recorded $13.2 in net costs related to this
transaction. These costs were significantly offset by the reduction in interest
charges for the principal amount outstanding. The average principal amount
outstanding during fiscal 2002 was $111.4 million, compared to $168 million
during fiscal 2001.

Provision for income taxes. Taxes increased 210%, or $12.7 million to $18.7
million for fiscal 2002 compared to $6.0 million for fiscal 2001. We operate
primarily in three tax jurisdictions, the United Kingdom, the United States and
the Republic of Ireland. In the United Kingdom the statutory rate was 30% in
both fiscal 2002 and 2001. The federal statutory rate in the United States was
35% in both years. In the Republic of Ireland, the statutory rate was 17% in
fiscal 2002 and 21% in fiscal 2001. Our effective tax rate was 33% in fiscal
2002 and 41% in fiscal 2001. The lower effective tax rate in fiscal 2002 is
primarily attributable to the cessation of goodwill amortization effective
October 1, 2001 described above.

Discontinued Operations. Our discontinued operations comprised our
pharmaceutical services businesses, which were ICTI (sold as of August 23,
2002), CTS (sold as of May 31, 2002) and CSS (sold as of December 31, 2001). In
fiscal 2002, we reported a gain of $101.1 million, net of taxes of $3.9 million,
representing the sale of these businesses. Also included in our results was
income from discontinued operations of $7.0 million, net of taxes of $2.2
million, representing results for ICTI, CTS and CSS through their respective
dates of sale.

Net income. The result of the items discussed above was that we reported $145.2
million of net income for fiscal 2002 as compared to net income of $16.4 million
in fiscal 2001. Net income per ADS was $3.13 (basic) and $3.12 (diluted),
compared to $0.41 (basic) and $0.40 (diluted) in fiscal 2001. The weighted
average number of ADS equivalent shares outstanding increased by 6.0 million due
primarily to the issuance of 6.6 million ADS equivalents in relation to our July
2001 equity offering, offset by the 0.5 million ADS equivalents we repurchased
during fiscal 2002. Our Board of Directors recommended the payment of a final
dividend of 2.00 pence per ordinary share, a 20% increase over fiscal 2001,
making the total dividend for fiscal 2002 3.00 pence per ordinary share compared
to 2.49 pence per ordinary share in fiscal 2001.

         NEW ACCOUNTING PRONOUNCEMENTS

         Please refer to Note 1 to the consolidated financial statements
included in Item 18 of this Form 20-F.

B. LIQUIDITY AND CAPITAL RESOURCES

We ended fiscal 2003 with $89.1 million cash on hand as compared to $313 million
at September 30, 2002. During fiscal year 2003, we acquired femhrt(R),
Estrostep(R), Loestrin(R) and the U.S. sales and marketing rights for Sarafem(R)
for a total of approximately $654 million. These transactions were financed from
cash on hand and the drawdown of approximately $350 million in senior debt, part
of a $450 million credit facility put in place during fiscal 2003.

The following table summarizes our net (decrease) / increase in cash and cash
equivalents:

<TABLE>
<CAPTION>
                                                                     FOR THE YEARS ENDED SEPTEMBER 30,
                                                                    2003            2002            2001
                                                               --------------   -------------   -------------
                                                                                (IN THOUSANDS)
<S>                                                            <C>              <C>             <C>
Net cash provided by operating activities                      $      164,077   $      73,378   $      52,913
Net cash (used in) / provided by investing activities                (670,677)        160,464        (140,804)
Net cash provided by / (used in) financing activities                 282,570        (267,300)        300,145
                                                               --------------   -------------   -------------
       Net (decrease) / increase in cash and cash equivalents  $     (224,030)  $     (33,458)  $     212,254
                                                               ==============   =============   =============
</TABLE>

                                       30
<PAGE>

Our net cash provided by operating activities increased by $95.7 million in
fiscal 2003 compared to 2002 primarily reflecting our increased operating
results from continuing operations generated from our recent product
acquisitions and growth in existing promoted products. Our working capital
movement increased $16.4 million from fiscal 2002 in support of our expanded
product portfolio and increased operating results. Our net debt as of September
30, 2003 was $253.3 million, and consisted of $295.8 million in term loans,
$46.6 million in Warner Chilcott senior notes less $89.1 million in cash.

On March 5, 2003, we entered into the above mentioned $450 million credit
facility with ABN AMRO Bank N.V., Barclays Bank PLC and Bank of Ireland. This
senior debt facility provides for a $100 million multi-currency revolving
facility, a $250 million three-year term loan facility and a $100 million
five-year term loan facility. The term loan facilities were made available to us
in connection with our acquisitions of Sarafem(R), Estrostep(R), Loestrin(R) and
femhrt(R), and have been drawn down by us in the second and third quarters of
our fiscal year 2003 as we completed these purchase transactions. We may use the
$100 million multi-currency revolving facility for all general corporate and
working capital purposes other than to finance the above-mentioned acquisitions
and related expenses. This credit agreement places certain restrictive covenants
on Galen and requires us to comply with certain financial covenants. As of
September 30, 2003, Galen was in compliance with these financial covenants. It
also contains certain events of default, which give the lenders the right to
demand repayment of the amounts drawn down under the credit agreement. Interest
is payable at a rate representing a margin which is initially, and the maximum,
a rate of 1.25 percent per annum (and which shall be adjusted from time to time
according to compliance by Galen with certain financial covenants) above the
London (or European in the case of an advance denominated in Euro) interbank
offered rate plus mandatory costs. This credit agreement also contains customary
warranties and indemnities for a facility of this nature. As of September 30,
2003, we had $100 million available for use under the revolving facility.

The Warner Chilcott senior notes outstanding are redeemable, in whole or in
part, at the option of Warner Chilcott beginning in 2004 at redemption prices
that decrease annually to the maturity date and range from 106.3125% to 100%.
The note indenture limits the ability of Warner Chilcott to incur or guarantee
additional debt, as well as to pay dividends or to redeem or to repurchase
capital stock. On December 18, 2003, Warner Chilcott gave notice to the trustee
under the note indenture of its intention to redeem all of the outstanding
senior notes on February 15, 2004. We may, from time to time, repay other
outstanding borrowings.

Bank and equivalent funding at September 30, 2003, amounted to $295.6 million,
of which $295 million was at variable rates based on LIBOR. We do not make use
of derivatives to hedge interest rate risk as we believe that our exposure to
changes in interest rates under the variable rate agreements will not have a
significant effect on our financial condition or results of operations.

Of our total indebtedness of $342.4 million at September 30, 2003, $341.1
million was denominated in U.S. dollars and the balance in pounds sterling. We
had no foreign currency option contracts at September 30, 2003.

We intend to fund our future liquidity needs, including capital expenditures and
dividend payment, through a combination of cash generated from operations, cash
balances on hand and availability under bank credit facilities. There is no
significant seasonality to our funding requirements, and we believe that these
sources will be sufficient to fund our anticipated working capital needs for the
foreseeable future. We generally expect to fund repayments of indebtedness with
other indebtedness. In the event that we pursue a significant acquisition, we
may be required to raise additional funds through additional indebtedness, or
the issuance of debt or equity securities.

We evaluate our balance sheet periodically to determine whether to refinance
outstanding indebtedness with cash on hand or with other indebtedness.
Accordingly, we may choose to reduce our indebtedness from time to time.

FINANCIAL CONDITION

                                       31
<PAGE>

<TABLE>
<CAPTION>
                                2003         2002
                             ----------   ----------
                                 (IN THOUSANDS)
<S>                          <C>          <C>
Total assets                 $1,565,365   $1,072,231
                             ==========   ==========
Indebtedness                 $  342,389   $   51,961
Other liabilities               225,851      111,263
                             ----------   ----------
    Total liabilities        $  568,240   $  163,224
                             ==========   ==========
Total shareholders' equity   $  997,125   $  909,007
                             ==========   ==========
</TABLE>

Total assets as of September 30, 2003 increased $493.1 million compared to
September 30, 2002 primarily due to our fiscal 2003 acquisition of femhrt(R),
Estrostep(R), Loestrin(R) and the U.S. sales and marketing rights for Sarafem(R)
for which we recognized intangible assets totaling $749 million. This
significant increase in total assets was partially offset by our decrease in
cash and cash equivalents of $223.9 million. The primary factor contributing to
the decrease in our cash and cash equivalents was the forementioned acquisitions
which were financed with cash on hand and the drawdown of approximately $350
million in senior debt. Our indebtedness as of September 30, 2003 increased
$290.4 million compared to September 30, 2002 primarily as a result of the $350
million in senior debt. Shareholders' equity increased $88.1 million principally
as a result of our fiscal 2003 net income of $96.2 million offset by $9.2
million in dividends declared.

The ratio of indebtedness to our total capitalization (indebtedness plus
shareholders' equity) increased to 26% as of September 30, 2003 from 5% as of
September 30, 2002. This increase is primarily due to our drawdown of $350
million in senior debt, described above, offset partially by the increase of
$88.1 million in shareholders' equity.

  C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

         For a discussion of our research and development activities, patents
and licenses, please see the information set forth under the heading "Item 4:
Information on the Company--Business Overview--Research and Development" in this
annual report.

  D. TREND INFORMATION

         Several trends may affect our future results of operations, liquidity
and capital resources, including:

         -        Acceptability of hormone replacement therapy;

         -        Acceptability of vaginal ring technology; and

         -        Delays in introducing new products due to governmental
                  regulation.

         ACCEPTABILITY OF HORMONE THERAPY.

         Three of our products, Estrace(R) tablets, Estrace(R) cream and
Menoring(R)/Femring(R) are estrogen therapy ("ET") products, and one of our
products, femhrt(R), is a combined estrogen-progestogen hormone therapy ("EPT")
product. In July 2002, a clinical trial that was part of a long-term study that
focuses on strategies for preventing heart disease, breast and colorectal cancer
and osteoporosis in postmenopausal women ("WHI") was terminated early when the
safety monitoring board determined that the risks of the trial exceeded the
benefits. The trial compared Prempro(TM) (an EPT product containing Premarin(R)
and the progestin medroxyprogesterone acetate) to a placebo in
non-hysterectomized patients. Despite a decrease in the incidence of hip
fracture and colorectal cancer, there was an increased risk of invasive breast
cancer, coronary heart disease, stroke, and blood clots in patients randomized
to Prempro(TM). A related clinical trial comparing Premarin(R) (an ET product
containing conjugated equine estrogens) to a placebo in hysterectomized patients
for the prevention of heart disease and osteoporosis, and any associated risk of
breast cancer, is still continuing at the recommendation of the safety
monitoring board.

                                       32
<PAGE>

         The outcome of these trials and any resulting changes in labeling for
HT products as a class may affect the acceptability of HT products (including ET
products) by patients, the willingness of physicians to prescribe HT for their
patients or the duration of their therapy. In any such event, we may not achieve
our anticipated sales levels for these products and we may not be able to recoup
our investment in the development of our products.

         ACCEPTABILITY OF VAGINAL RING TECHNOLOGY.

         An important part of our strategy is to develop and commercialize
pharmaceutical products based on innovative formulations and novel drug delivery
technology, particularly our vaginal ring technology. To date, vaginal ring
technology has not been widely used as a drug delivery technology and it may not
be readily accepted by either prescribing physicians or their patients. Other
alternative hormone replacement therapies, including orally administered
tablets, transdermal patches and subcutaneous implants have each been used for
some time and are more familiar to many prescribing physicians and their
patients. If our vaginal ring products are not accepted as an alternative method
of administration of hormone replacement therapy, we may not achieve our
anticipated sales levels for these products. In such an event we may not be able
to recoup our investment in the development of vaginal ring products.

         DELAYS IN INTRODUCING NEW PRODUCTS AND SUPPLY OF PHARMACEUTICAL
PRODUCTS DUE TO GOVERNMENTAL REGULATION.

         Another important part of our strategy is to develop and commercialize
proprietary products and we have a number of products in various stages of
development. To begin marketing most of our new products, we must obtain
approval from regulatory bodies, including the U.S. Federal Drug Administration,
the U.K. Medicines and Healthcare products Regulatory Agency and other
regulatory bodies based upon pre-clinical testing, manufacturing chemistry and
control data, bioavailability and other clinical data which we are required to
generate prior to gaining regulatory approval. We cannot guarantee that any of
our new products will meet these clinical requirements or that we otherwise will
be able to obtain the necessary regulatory approvals to enable us to market them
in the future.

E. OFF-BALANCE SHEET ARRANGEMENTS

         We do not have any off balance sheet arrangements, except for operating
leases considered normal to our business.

F. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

         The following table summarizes our financial commitments as of
September 30, 2003:

<TABLE>
<CAPTION>
                                                        CASH PAYMENTS DUE BY PERIOD
                                                               (IN THOUSANDS)
                                                                                                MORE
                                                  LESS THAN 1                                  THAN 5
                                        TOTAL        YEAR       1 TO 3 YEARS   3 TO 5 YEARS     YEARS
                                      ---------   -----------   ------------   ------------   ---------
<S>                                   <C>         <C>           <C>            <C>            <C>
Long-term debt:
      Variable rate bank debt         $ 294,991   $   102,813   $    163,459   $     28,719   $       -
      Fixed rate bank debt                  577           275            302              -           -
      Fixed rate notes                   46,585             -              -         46,585           -
Supply agreement obligations             73,475        37,175         24,300         12,000           -
Capital lease obligations                   236           233              3              -           -
Operating lease obligations               4,959         1,227          1,699          2,033           -
                                      ---------   -----------   ------------   ------------   ---------
      Total contractual obligations   $ 420,823   $   141,723   $    189,763   $     89,337   $       -
                                      =========   ===========   ============   ============   =========
</TABLE>

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES.

  A. DIRECTORS AND SENIOR MANAGEMENT

                                       33
<PAGE>

  DIRECTORS

         The information set forth under the heading "Board of Directors" on
page 14 of our 2003 Annual Report and Accounts filed as an exhibit to this Form
20-F is incorporated in this document by reference.

  SENIOR MANAGEMENT

         The information concerning Dr. John A. King, Chairman, Roger M.
Boissonneault, Chief Executive Officer, and R. Geoffrey Elliott, Chief Financial
Officer, set forth under the heading "Board of Directors" on page 14 of our 2003
Annual Report and Accounts filed as an exhibit to this Form 20-F is incorporated
in this document by reference.

         W. Carlton Reichel (45), President, Pharmaceuticals, joined Galen in
October 2000 after nearly 20 years of experience at Parke-Davis, a division of
Warner-Lambert (now a part of Pfizer), where together with Galen CEO Roger M.
Boissonneault, Mr. Reichel was a pioneer in the pharmaceutical marketing methods
currently employed by Galen. Most recently, he held the position of President,
U.K./British Isles at Warner-Lambert.

         Anthony D. Bruno (47), Executive Vice President, Corporate Development,
General Counsel and Company Secretary, joined Galen on March 1, 2001 following
over 17 years of experience with Warner-Lambert. His most recent position was
Vice President and Associate General Counsel, Pharmaceuticals, where he was
responsible for all legal matters relating to Warner-Lambert's pharmaceutical
business worldwide.

         Leland H. Cross (47), Senior Vice President, Technical Operations,
joined Galen on September 1, 2001 and is responsible for Galen's technical
operations worldwide. Mr. Cross was part of the Global Manufacturing group at
Warner-Lambert (which became part of Pfizer in June 2000) for seven years, where
most recently he was General Manager of Pfizer Ireland Pharmaceuticals,
responsible for Pfizer's dosage manufacturing operations in Ireland. Prior to
joining Warner-Lambert, Mr. Cross managed a manufacturing operation for Merck &
Co. Inc.

         Tina M. deVries, Ph.D. (43), Vice President, Pharmaceutics, joined
Galen when Warner Chilcott was acquired on September 29, 2000. Dr. deVries is
responsible for pharmaceutical development projects undertaken in the United
States and clinical pharmacokinetics. Dr. deVries joined Warner Chilcott in 1996
after seven years in the research and development area with Warner-Lambert.

         Grant Elliott, (38), Senior Vice President, Quality, joined Galen in
May 1990 as Quality Assurance Manager for VR products and has held positions of
increasing responsibility in the areas of product development, manufacturing,
quality control and quality assurance until his appointment to Senior Vice
President in May 2003. Mr. Elliott is a Qualified Person and is responsible for
global quality for all Galen products. Prior to joining Galen, Mr. Elliott held
quality control positions at Schering AG and Glaxo Pharmaceuticals.

         Herman Ellman, M.D. (56), Senior Vice President, Clinical Development,
joined Galen when Warner Chilcott was acquired on September 29, 2000. Dr. Ellman
is responsible for U.S. clinical development activities in the women's
healthcare area. Prior to joining Warner Chilcott, Dr. Ellman held the position
of Medical Director for Women's Healthcare of Berlex Laboratories.

         Claire Gilligan, Ph.D. (42), Senior Vice President, Pharmaceutical
Development, joined Galen in June 1992 as Regulatory Affairs Manager and has
held positions of increasing responsibility until her appointment to Senior Vice
President in September 2000. Dr. Gilligan is responsible for all pharmaceutical
development projects that are undertaken in the United Kingdom including the
vaginal ring and solid dosage forms in the areas of female health and
dermatology.

         Izumi Hara (44), Senior Vice President and Deputy General Counsel,
joined Galen in June 2001 and is responsible for the legal matters of the
Company. Prior to joining Galen, Ms. Hara held positions of increasing
responsibility at Warner-Lambert where her most recent position was Vice
President and Associate General Counsel, Corporate Affairs, where she was
responsible for all legal matters relating to Warner-Lambert's acquisitions,
divestitures, alliances and other transactions in all lines of business
worldwide.

                                       34
<PAGE>

         Alvin D. Howard (49), Vice President, Regulatory Affairs, joined Galen
on February 5, 2001 and is responsible for the worldwide registration of all
Galen products. Prior to joining Galen, Mr. Howard was Vice President, Worldwide
Regulatory Affairs at Roberts Pharmaceuticals.

         David G. Kelly (42), Senior Vice President, Finance and Planning,
joined Galen on December 1, 2001. He is responsible for group financial,
treasury and tax reporting and planning. He also is responsible for investor
relations. Prior to joining Galen he was Chief Financial Officer of Norkom
Technologies Limited, a Dublin based software company. Mr. Kelly served as Group
Vice President, Finance of Warner Chilcott plc from 1995 through September 2000.

         William J. Poll (51), Senior Vice President, Finance, joined Galen when
Warner Chilcott was acquired on September 29, 2000. Mr. Poll is responsible for
financial reporting and planning for the pharmaceutical business and
pharmaceutical trade relations in the United States. Prior to joining Warner
Chilcott in 1996, Mr. Poll held the position of Director of Financial
Information Services at Warner-Lambert Company.

  B. COMPENSATION

         For details of compensation for our directors for the year ended
September 30, 2003, see the information set forth under the headings, "Report of
the Remuneration Committee--Breakdown of Remunerations" and "Report of the
Remuneration Committee - Audited Information - Directors' emoluments and
compensation" on pages 22 and 25, respectively, of our 2003 Annual Report and
Accounts filed as an exhibit to this Form 20-F and incorporated in this document
by reference.

  INCENTIVE PLANS

         Our executive directors and senior management participate in various
incentive compensation plans, comprising cash bonuses, administered by our
remuneration committee. These bonuses are designed to align compensation with
business objectives and individual performance to retain and reward the
executives for their commitment to our long-term success. Each executive and
member of senior management has the opportunity to earn an incentive award based
on the following process:

         -        Company and individual goals are set prior to the beginning of
                  the performance cycle, which is our fiscal year,

         -        The remuneration committee specifies target ranges for
                  possible incentive awards,

         -        At the end of the year, each executive's performance is
                  evaluated against his or her goals and objectives and other
                  contributions to our Company,

         -        Each executive's performance is then compared with peers
                  within our Company, and

         -        Incentive awards, if any, are determined based upon each
                  executive's performance and contributions during the year,
                  taking into consideration our overall performance and a
                  comparison with compensation practices of other comparable
                  companies.

         The Company is proposing to adopt a new Long Term Incentive Plan, which
will be presented to the shareholders at the Annual General Meeting of
shareholders in February 2004. The information set forth in the report of the
remuneration committee under the heading "Proposed Long Term Incentive Plan" on
page 22 of our 2003 Annual Report and Accounts and Appendix I of the Notice of
Annual General Meeting, both filed as exhibits to this Form 20-F, are
incorporated in this document by reference.

  C. BOARD PRACTICES

<TABLE>
<CAPTION>
     Name of Director       Director Since   Last Elected
-------------------------   --------------   ------------
<S>                         <C>              <C>
Roger M. Boissonneault(1)        2000            2001
Michael G. Carter                1998            2003
R. Geoffrey Elliott              1993            2002
</TABLE>

                                       35
<PAGE>

<TABLE>
<S>                         <C>              <C>
Harold A. Ennis                  1996            2003
David Gibbons                    1997            2002
John A. King                     1991            2003
</TABLE>

----------
(1) Proposed for re-election in 2004.

         Under our articles of association at each annual general meeting of the
shareholders the following directors must retire and may be proposed for
re-election to the Board:

         -        each director must retire from office at least every 3 years;
                  and

         -        any person whom the directors have appointed either to fill a
                  casual vacancy or as an addition to the existing directors.
                  Any director so appointed holds office only until the next
                  annual general meeting, and is then eligible for
                  reappointment.

         Roger M. Boissonneault has a service agreement with Warner Chilcott,
Inc. dated May 4, 2000 (amended on May 20, 2002) which is terminable on 12
months' notice given by either party to the other. Mr. Boissonneault's benefits
include bonus, company car, mobile telephone, 401(k) contributions, and health,
life and disability insurance. If Warner Chilcott, Inc. terminates the agreement
without cause, Mr. Boissonneault will be entitled to a severance payment equal
to his base salary over his 12 month notice period payable in equal monthly
installments or in a lump sum within 10 days of the termination date. If Warner
Chilcott, Inc. terminates the agreement following a change of control of Warner
Chilcott, Inc. or the Company or Mr. Boissonneault terminates the agreement for
any reason after 60 days following a change of control, he is entitled to
receive an amount equal to his then current base salary for a period of 18
months payable in a lump sum plus a payment of 1.5 times his target bonus
(defined as 100% of his base salary). In addition, Mr. Boissonneault is entitled
to continued participation in Warner Chilcott Inc.'s health and other welfare
benefit plans at the company's expense for the applicable 12 or 18 month period.
Mr. Boissonneault is also subject to a 12 month non-compete covenant and 12
month non-solicitation of customer and employee covenants. The period of these
covenants increases to 18 months in connection with a termination following a
change of control. Mr. Boissonneault's base salary for fiscal year 2003 was
$726,000. In addition, Mr. Boissonneault is entitled to receive an annual cash
bonus with a target of 100% of his base salary.

         R. Geoffrey Elliott has a service agreement with the Company dated July
2, 1997 which is terminable on 12 months notice given by either party to the
other. Mr. Elliott's benefits include bonus, company car, pension contribution,
permanent health insurance, private health insurance and home telephone charges.
The Company may terminate the agreement by making a payment in lieu of notice
equivalent to salary and the cost to the Company of providing contractual
benefits over the 12 month notice period. The termination payment is payable in
equal monthly installments over the 12 month period during which time Mr.
Elliott is under a duty to mitigate his loss. In the event that Mr. Elliott
obtains any new employment and/or engagement during such 12 month notice period,
he shall make full disclosure to the Company and the payment in lieu of notice
will be reduced by the amount of remuneration or other benefits received from
the new employment and/or engagement. The Company may place Mr. Elliott on
garden leave for a period of 6 months in total. On termination of the agreement,
Mr. Elliott is subject to a 6 month non-compete covenant, a 6 month
non-solicitation of employee covenant and a 3 month non-solicitation of customer
covenant. A discretionary cash bonus is payable annually to Mr. Elliott up to a
maximum of 100% of his total compensation.

Dr J A. King is employed under two agreements with the Company and Warner
Chilcott (Bermuda) Limited. His employment is terminable on 12 months' notice
given by either party to the other. His benefits include bonus, pension
contribution, permanent health insurance and private health insurance coverage.
The Company may terminate the agreement by making a payment in lieu of notice
equivalent to salary and the cost to the Company of providing contractual
benefits over the 12 month notice period. The termination payment is payable in
equal monthly installments over the 12 month period during which time Dr. King
is under a duty to mitigate his loss. In the event that Dr. King obtains any new
employment and/or engagement during such 12 month notice period, he shall make
full disclosure to the Company and the payment in lieu of notice will be reduced
by the amount of remuneration or other benefits received from the new employment
and/or engagement. The Company may place Dr. King on garden leave for a period
of 6 months in total. On termination of the agreement, Dr. King is subject to a
6 month non-compete covenant, a 6 month non-solicitation of employee covenant
and a 3 month non-solicitation of customer covenant. Dr. King is entitled to
annual salaries of (pound)72,000 and (pound)48,000 from Galen Holdings and
Warner Chilcott (Bermuda), respectively. He is also

                                       36
<PAGE>

entitled to a bonus and further benefit or remuneration under each agreement at
the sole discretion of the relevant board of directors. Dr. King is also
entitled to an annual pension contribution under his service agreement with
Galen.

         Messrs. Ennis, Gibbons and Carter were appointed to our Board under
letters of appointment dated May 22, 1997, May 22, 1997 and March 13, 1998,
respectively. The appointment of the non-executives may be terminated at will.
Each of these directors is entitled to a fee of approximately $77,000 per annum.

  BOARD COMMITTEES

         Our audit committee and remuneration committee have each operated
throughout the year. Our audit committee at present consists of the three
independent directors (as defined in the current Nasdaq(R) listing standards),
Dr. Carter, Dr. Ennis and Mr. Gibbons. Our audit committee, which is chaired by
Dr. Ennis, is required to meet at least four times a year and assists the Board
in ensuring that our published financial statements give a true and fair view
and in securing reliable internal financial information for management
decision-making. It also reviews the suitability and effectiveness of our
internal control systems. The committee reviews the findings of the internal and
external auditors and key accounting policies and judgments.

         Our remuneration committee consists of three independent directors, Dr.
Carter, Dr. Ennis and Mr. Gibbons and is chaired by Mr. Gibbons. The committee
is required to meet at least once a year. The primary function of our
remuneration committee is to determine remuneration and other terms of
employment for the executive directors and senior employees, having regard to
performance.

         In setting the remuneration policy, our remuneration committee
considers a number of factors including:

         -        the basic salaries and benefits available to executive
                  directors and senior employees of comparable companies;

         -        the need to attract and retain directors of an appropriate
                  caliber; and

         -        the need to ensure executive directors' commitment to the
                  continued success of Galen by means of incentive schemes.

  D. EMPLOYEES

         As of September 30, 2003, Galen had approximately 1,136 employees, an
increase of 176 from September 30, 2002, primarily reflecting the expansion of
our U.S. sales force by approximately 120 representatives. Subsequent to the
sale of PDMS in December 2003, Galen had approximately 897 employees, reflecting
the 294 employees that were transferred with the sale of the business and the
hiring of approximately 55 additional sales representatives in the United States
pursuant to the sales force expansion plans. The employees of our production,
stores and engineering departments, located at our facility in Larne, Northern
Ireland are covered by a labor agreement that expires July 25, 2005. We believe
that our employee relations are satisfactory.

         The number of persons (including executive directors) employed by us at
the end of each of the last three fiscal years were:

<TABLE>
<CAPTION>
         2001                   2002                   2003
---------------------  ---------------------  ---------------------
U.K. AND               U.K. AND               U.K. AND
REP. OF                REP. OF                REP. OF
IRELAND   U.S.  TOTAL  IRELAND   U.S.  TOTAL  IRELAND   U.S.  TOTAL
--------  ----  -----  --------  ----  -----  --------  ----  -----
<S>       <C>   <C>    <C>       <C>   <C>    <C>       <C>   <C>
 1,113    695   1,808    662     298    960     692     444   1,136
 =====    ===   =====    ===     ===    ===     ===     ===   =====
</TABLE>

  E. SHARE OWNERSHIP

                                       37
<PAGE>

         For a description of our directors' share ownership in Galen and of
share options held by them, see the information set forth under the headings,
"Directors' report for the year ended 30 September 2003--Directors' interests in
shares of the company" and "Directors' report for the year ended 30 September
2003--Interests in share options" on pages 17 and 26, respectively, of our 2003
Annual Report and Accounts filed as an exhibit to this Form 20-F and
incorporated in this document by reference. Our share option plans are described
under "Note 14 -- Stock Compensation Plans" in our consolidated financial
statements contained under the heading, "Item 18. Financial Statements" in this
Form 20-F.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS.

  A. MAJOR SHAREHOLDERS

         Please see "Substantial shareholdings" on page 17 of our 2003 Annual
Report and Accounts filed as an exhibit to this Form 20-F and incorporated in
this document by reference for information about our major shareholders.

         On September 30, 2003, we had 188,209,895 ordinary shares outstanding.
The total number of Galen ADSs outstanding was 3,464,633 representing underlying
ownership of 13,858,532 ordinary shares, approximately 7% of our outstanding
share capital. To our knowledge, as of September 30, 2003, the portion of our
outstanding shares held in the United States was approximately 12% and the
number of record holders in the United States was approximately 75.

         The following chart shows significant changes in the percentage
ownership by our major shareholders during the past three years, including the
date of sale and the percentage of outstanding ordinary shares held after each
sale.

<TABLE>
<CAPTION>
                                     PERCENTAGE
                 DATE OF CHANGE IN   HELD UPON
                      HOLDING           SALE
                 -----------------   ----------
<S>              <C>                 <C>
Allen J. McClay    December 2000             24%
                       July 2001             20%
                        May 2002             10%
                   November 2002              9%
                   December 2003              6%

John A. King       December 2000             12%
                       July 2001              9%
</TABLE>

  B. RELATED PARTY TRANSACTIONS

         In December 2001, we sold our Chemical Synthesis Services business to
companies controlled by Dr. Allen McClay, a founder, former President and
Director of Galen. As part of the transaction, Alan Armstrong, then President of
Galen's Pharmaceutical Services division, resigned from his positions with
Galen. In May 2002, we sold our Clinical Trials Services business to companies
controlled by Dr. McClay. In August 2002, we sold our Interactive Clinical
Technologies business to a company controlled by Dr. McClay. We received a total
of $235 million in consideration for the sale of these businesses. See "Item 10.
ADDITIONAL INFORMATION - Material Contracts."

         In December 2003, we sold our Pharmaceutical Development and
Manufacturing Services business ("PDMS"), which formed part of our contract
manufacturing business, to a company controlled by Dr. Allen McClay, a founder,
former President and Director of Galen. For the years ended September 30, 2003
and 2002, PDMS earned revenue of $17.8 million and $17.1 million, respectively.
As part of the agreement, PDMS will enter into a supply agreement with Galen to
continue to manufacture, supply and distribute a number of our products for the
U.K and Irish markets. We received a cash consideration of (pound)20 million
($34 million) for the sale of this business. See "Item 10. Additional
Information - Material Contracts."

                                       38
<PAGE>

         At December 22, 2003 Elan Corporation plc ("Elan") and its subsidiaries
held 3.8% of Galen's share capital. Mr. Thomas G. Lynch, Executive Vice Chairman
of the Board of Directors of Elan, served on Galen's Board as a non-executive
director until February 13, 2002. Warner Chilcott recorded administrative and
support fees charged by Elan of $237,000 in the year ended December 31, 1999 and
$158,000 in the nine months ended September 30, 2000. No fees were incurred in
fiscal 2001, 2002 or 2003.

         In March 1999, Warner Chilcott reached a binding agreement with Elan
under which Elan agreed to acquire Warner Chilcott's marketing rights to an
extended-release nifedipine product. The agreement was terminated in September
2002 by mutual agreement. Royalty payments received from Elan during the years
ended September 30, 2001 and September 30, 2002 amounted to $2.5 million and
$1.7 million, respectively. Under the terms of the termination, Elan paid $1.5
million to Warner Chilcott.

         Boron-LePore Group, Inc. has provided a range of services to Warner
Chilcott including providing contract sales personnel, recruitment of sales
representatives, certain sample data record keeping and meeting planning
services. Mr. Roger M. Boissonneault, Galen's Chief Executive Officer, served on
the Board of Boron-LePore until June 24, 2002, when Boron-Lepore was acquired by
Cardinal. During the years ended September 30, 2001 and 2002, Boron-Lepore
provided meeting and planning services to Warner Chilcott for fees of $591,000
and $1,916,000, respectively.

  C. INTERESTS OF EXPERTS AND COUNSEL

         Not applicable.

ITEM 8. FINANCIAL INFORMATION.

  A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

         See Item 18.

  LEGAL PROCEEDINGS

         General Matters

         We are involved in various legal proceedings of a nature considered
normal to our business including product liability and other matters. In the
event of adverse outcomes of these proceedings, we believe that resulting
liabilities are either covered by insurance, established reserves, or would not
have a material adverse effect on our financial condition or our results of
operations.

         Sarafem(R)

         Lilly initiated legal proceedings in 2002 against Teva Pharmaceuticals
("Teva") for patent infringement. These proceedings were initiated in response
to an abbreviated new drug application filed by Teva to market a generic version
of Sarafem(R). Since acquiring the U.S. sales and marketing rights for
Sarafem(R) from Lilly in January 2003, Galen has continued to pursue these
claims vigorously.

         The suit asserts that the commercial manufacture, use, sale or offer to
sell in the United States, or importation into the United States of Teva's
generic product would infringe the patent-in-suit. Teva contends that the
patent-in-suit is invalid, unenforceable or would not be infringed by Teva's
commercial manufacture, use, sale or offer to sell in the United States, or
importation into the United States of Teva generic products. Lilly is entitled
to a 30-month statutory bar to the FDA's approval of Teva's generic version of
Sarafem(R). The 30-month stay will expire in August 2004. However, if before the
expiration of the 30-month period the court decides that the patent-in-suit is
invalid or not infringed, Teva's FDA approval will be made effective on the date
of the court's decision. Thus, an unfavorable decision by the district court
against Galen would shorten the 30-month period.

         The bench trial in this case took place in November 2003. After the
exchange of post-trial briefs and responses in January 2004, the case will be
decided. We cannot assure you when the case will be decided or whether the
patent will

                                       39
<PAGE>

be ultimately held valid, enforceable or infringed. In the event the
patent-in-suit is found valid and infringed, an injunction would be available
until at least November 2007. An adverse outcome in this proceeding would likely
have a material adverse effect on our results of operations because the
introduction of a generic competitor to Sarafem(R) would likely drastically
reduce sales of Sarafem(R).

  SETTLEMENT WITH BARR LABORATORIES

         Galen has signed a letter of intent with Barr giving Barr an
opportunity to acquire from Galen an exclusive license in the United States and
Canada to market, distribute and sell the currently marketed Loestrin(R) and
Minestrin(R) oral contraceptives products in connection with the settlement of
the patent infringement litigation against Barr relating to Estrostep(R) and
femhrt(R). The settlement would also allow Barr to launch generic versions of
Estrostep(R) and femhrt(R) six months prior to patent expiry in 2008 and 2010,
respectively. Under the terms of a separate letter of intent, Barr would grant
to Galen an option to acquire an exclusive license for Barr's generic version of
our currently marketed Ovcon(R) 35 oral contraceptive. These transactions are
subject to negotiation of definitive agreements, completion of due diligence and
other conditions, including antitrust review by the U.S. Federal Trade
Commission.

         On December 16, 2003, Galen received a letter from the Federal Trade
Commission's (FTC) Bureau of Competition requesting voluntary disclosure of
certain information concerning Barr's proposed acquisition of the U.S. and
Canadian rights to Galen's Loestrin(R) and Loestrin(R) FE oral contraceptive
products and the proposed settlement of pending patent litigation between Barr
and Galen. The letter also requests information concerning the proposed option
for Galen to acquire an exclusive license to Barr's generic version of Galen's
Ovcon(R) 35 oral contraceptive. Galen intends to cooperate fully with the
request. We are currently unable to determine the impact, if any, that the FTC's
request would have on the closing of the proposed transactions.

  DIVIDEND DISTRIBUTION POLICY

         We have paid total dividends of $9,241,000, $7,352,000 and $5,012,000
in each of our fiscal years ended September 30, 2003, 2002 and 2001 based on
U.K. GAAP earnings. The dividends are payable in pounds sterling. Any
determination to pay dividends in the future will be at the discretion of our
Board of Directors and will be dependent upon our results of operations,
financial condition, capital expenditures, working capital requirements, any
contractual restrictions and other factors deemed relevant by the Board of
Directors. Unrestricted retained earnings available for payment of dividends
under U.K. GAAP at September 30, 2003 were $159,134,000.

ITEM 9. THE OFFER AND LISTING.

         The only applicable items are Items 9.A.4 and 9.C.

  A.4. MARKET PRICE INFORMATION

         We completed our initial public offering of shares in July 1997 when we
listed our ordinary shares on the London Stock Exchange. Our ordinary shares,
represented by American Depositary Shares, or ADS, have been listed on the
NASDAQ(R) National Market under the Symbol "GALN" since September 29, 2000, the
date that the scheme of arrangement by means of which we acquired Warner
Chilcott, was declared effective. Each Galen ADS currently represents underlying
ownership of four ordinary shares of Galen.

         (a) Annual high and low market prices for the last five full financial
years:

<TABLE>
<CAPTION>
              NASDAQ                 LONDON STOCK EXCHANGE
      ----------------------   --------------------------------
      Price Per ADS (U.S. $)   Price per Ordinary Share (pence)
         HIGH        LOW            HIGH               LOW
      ----------  ----------   ---------------   --------------
<S>   <C>         <C>          <C>               <C>
2003    50.00       19.31          752.00            300.00
2002    45.75       16.54          787.00            264.10
2001    57.69       28.15          977.00            495.00
2000       --          --          975.00            505.00
1999       --          --          577.50            337.50
</TABLE>

                                       40
<PAGE>

         (b) Quarterly high and low market prices for the two most recent full
financial years:

<TABLE>
<CAPTION>
                             NASDAQ                 LONDON STOCK EXCHANGE
                     ----------------------   --------------------------------
                     Price Per ADS (U.S. $)   Price per Ordinary Share (pence)
                        HIGH        LOW            HIGH              LOW
                     ---------   ----------   ---------------   --------------
<S>                  <C>         <C>          <C>               <C>
FISCAL YEAR 2003
    First Quarter      35.29       22.30          550.00            355.00
    Second Quarter     33.25       19.31          510.00            300.00
    Third Quarter      44.30       25.58          610.22            399.80
    Fourth Quarter     50.00       34.08          752.00            514.75

FISCAL YEAR 2002
    First Quarter      45.75       37.25          787.00            625.50
    Second Quarter     41.13       32.25          725.00            563.49
    Third Quarter      36.15       26.34          630.00            420.00
    Fourth Quarter     28.77       16.54          475.00            264.10
</TABLE>

         (c) Monthly high and low market prices for the most recent six months
and for the last practicable date prior to the date of the filing of this annual
report:

<TABLE>
<CAPTION>
                             NASDAQ                 LONDON STOCK EXCHANGE
                     ----------------------   --------------------------------
                     Price Per ADS (U.S. $)   Price per Ordinary Share (pence)
                        HIGH        LOW            HIGH              LOW
                     ---------   ----------   ---------------   --------------
 <S>                 <C>         <C>          <C>               <C>
 December 22, 2003     53.00       51.81          752.50            740.00
 November 2003         53.70       47.81          795.00            713.00
 October 2003          52.02       43.05          756.00            662.00
 September 2003        47.82       37.95          709.00            594.00
 August 2003           41.36       37.05          648.50            562.50
 July 2003             50.00       34.08          752.00            514.75
 June 2003             41.30       33.65          610.22            515.00
</TABLE>

C. MARKETS ON WHICH OUR ORDINARY SHARES TRADE

         Our ordinary shares are listed on the London Stock Exchange and on the
Irish Stock Exchange under the symbol "GAL." American Depositary Shares, each
representing four of our ordinary shares, have been listed on the NASDAQ(R)
National Market under the Symbol "GALN" since September 29, 2000.

ITEM 10. ADDITIONAL INFORMATION.

  A. SHARE CAPITAL

         Not applicable.

  B. MEMORANDUM AND ARTICLES OF ASSOCIATION

         For a description of our Memorandum and Articles of Association, please
see the information set forth under the heading "Description of Galen Share
Capital" on pages 77-83 of Amendment No. 1 to our Form F-1 Registration
Statement, Registration No. 333-64324, as filed with the Securities and Exchange
Commission on July 19, 2001, which is incorporated in this document by
reference.

                                       41
<PAGE>

On February 19, 2002, we adopted the following amendments to our Articles of
Association, which changed the retirement requirements for our Board of
Directors from requiring that one third of the Board retire every three years to
require each director to retire at least every three years:

         (a)      The first sentence of Article 115 was deleted and replaced
with the following wording: "Each director must retire at least every three
years".

         (b)      The first sentence of Article 116 was deleted.

         (c)      The following wording from Article 120 was deleted: "and may
also determine the rotation in which any such appointed directors are to
retire".

         (d)      The following wording was deleted from Article 121: "but shall
not be taken into account in determining the directors who are to retire by
rotation at such meeting".

A copy of the revised Articles of Association has been filed as an exhibit to
this annual report.

  C. MATERIAL CONTRACTS

         For a description of our material employment agreements, please see the
information set forth under the heading "Item 6. Directors, Senior Management
and Employees--Board Practices."

         The following is a description of contracts that have been entered into
by us and/or our subsidiaries since September 30, 2001 and are or may be
material to our business:

-        A Business Purchase Agreement, among Galen and Alhow Laboratories
         Limited, and a share purchase agreement, among Galen and Almac Sciences
         Limited, both dated January 7, 2002, for the sale of the Chemical
         Synthesis Services business for $36 million. Alhow Laboratories Limited
         and Almac Sciences Limited were each controlled by Dr. Allen McClay at
         the time of sale. As part of this transaction, Galen agreed to
         indemnify the buyer against certain claims arising in relation to the
         business in the period prior to closing of the sale, subject to certain
         limitations. Galen also provided certain warranties in both agreements,
         and any claims brought under these warranties will be subject to a de
         minimis threshold and will be capped at the purchase price. In
         addition, Galen entered into certain non-compete provisions.

-        A Share Purchase Agreement dated May 8, 2002 among Galen holdings PLC
         and Clinical Trial Services Inc. and a share purchase agreement dated
         May 8, 2002 among Galen holdings PLC, Clinical Trial Services Limited
         and Clinical Trial Services (US) Inc. for the sale of the Clinical
         Trial Services business to companies controlled by Dr. Allen McClay for
         approximately $183 million. As part of this transaction, Galen provided
         certain warranties and indemnities in a form which is usual for a
         transaction of this nature. The time limit in respect of which many
         warranty claims can be made is eighteen months from closing (save for
         tax warranties which expire on the seventh anniversary closing). Claims
         brought under these warranties will be capped at the purchase price. In
         addition, Galen entered into certain non-compete provisions.

-        A Stock and Asset Purchase Agreement dated August 22, 2002 between ICTI
         Acquisition, Inc. ("ICTI") and Galen for the sale of Interactive
         Clinical Technologies, Inc. to a company controlled by Dr. Allen
         McClay, for $16 million. This agreement contains a non-compete
         undertaking from Galen which expires three years from the closing date
         (August 22, 2002).

-        An Assignment, Transfer and Assumption Agreement dated December 7, 2002
         between Galen (Chemicals) Limited and Lilly relating to the acquisition
         of the U.S. sales and marketing rights to Sarafem(R) for $295 million.
         Under the agreement, the assets transferred or licensed by Lilly to
         Galen (Chemicals) Limited include: (i) the assignment of certain
         trademarks and trade dress relating to Sarafem(R), including the name
         Sarafem(R), and all of the marketing materials, transferable books and
         records, copyrights and Internet domain names relating to the product
         and (ii) a non-exclusive license to the use of patent, technology and
         certain trademarks and trade dress related to the product in the United
         States. On or after the second anniversary of the closing

                                       42
<PAGE>

         date, or earlier if Lilly decides to further license or itself practice
         the licensed patent, Galen (Chemicals) Limited will have the option to
         convert the non-exclusive license to an exclusive license by paying
         Lilly an additional $10,000,000. In addition to the foregoing, Lilly
         will co-promote Sarafem(R) in the United States until September 30,
         2003, unless such arrangement is sooner terminated by Lilly.

-        A Manufacturing Agreement dated December 7, 2002 between Galen
         (Chemicals) Limited and Lilly relating to the supply of Sarafem(R)for 3
         years.

-        A Purchase and Sale Agreement, dated March 5, 2003, between Galen and
         Pfizer to acquire Estrostep(R)and Loestrin(R)for approximately $197
         million. Further contingent cash consideration of up to a maximum of
         $55.4 million will become payable by Galen to Pfizer in the event that
         Estrostep(R)retains market exclusivity during the life of its patent.
         The agreement also grants Galen a right of first refusal to purchase
         Pfizer's manufacturing facility in Fajardo, Puerto Rico. This right
         will be exercisable until March 27, 2008. The agreement also contains
         representations, warranties and indemnities that are usual and
         customary to agreements of this type.

-        A Purchase and Sale Agreement, dated March 5, 2003, between Galen and
         Pfizer to acquire femhrt(R)for approximately $162 million. Further
         contingent cash consideration of up to a maximum of $69.6 million will
         become payable by Galen to Pfizer in the event that femhrt(R)retains
         market exclusivity during the life of its patent. The agreement also
         contains representations, warranties and indemnities that are usual and
         customary to agreements of this type.

-        A Credit Agreement dated March 5, 2003, between Galen (Chemicals)
         Limited and The Governor and Company of the Bank of Ireland, relating
         to a US$450,000,000 credit facility.

-        A Manufacturing Agreement dated September 24, 1997, between Duramed
         Pharmaceuticals, Inc. and Warner-Lambert Company, which was assigned to
         Galen on April 17 2003, relating to the supply of femhrt(R)until 2007,
         plus two additional one year terms.

-        A Transitional Supply Agreement dated March 27, 2003, between Galen and
         Pfizer relating to the supply of Estrostep(R)and Loestrin(R)for 5
         years.

-        A Co-promotion Agreement, dated April 1, 2003, between Galen and
         Bristol-Myers for Dovonex(R)in the United States. Under the agreement,
         Galen is compensated by Bristol-Myers based on an agreed formula
         relating to the sales levels of Dovonex(R). The term of the agreement
         is until December 31, 2007 or until the option (described below) is
         exercised, whichever is earlier.

-        An Option Agreement, dated April 1, 2003, between Galen and
         Bristol-Myers whereby Galen has an option to purchase Bristol-Myers's
         U.S. rights to Dovonex(R)under pre-negotiated terms in January 2005 or
         January 2006 for a purchase price of $250 or $200 million,
         respectively, plus a royalty, on net sales of Dovonex(R)until the end
         of 2007, of 10% or 5%, respectively; however, Bristol-Myers can refuse
         to consummate the sale of its rights to Dovonex(R)prior to January
         2006. If Galen exercises its option after August 1, 2004 but on or
         prior to August 1, 2005, Bristol-Myers is obliged to conclude the
         purchase transaction in January 2006.

-        A Master Agreement, dated April 1, 2003, between Galen and LEO Pharma
         governing certain aspects of the relationship between Galen and LEO
         relating to Dovonex(R)and Dovobet(R). Under the terms of the Master
         Agreement, Galen will pay LEO Pharma a final milestone payment of $40
         million at the time Dovobet(R)receives final FDA approval.

-        A Development Agreement, dated April 1, 2003, between Galen and LEO
         Pharma relating to the development of Dovobet(R).

-        A Business Purchase Agreement, dated December 2, 2003, between Galen
         Limited and Pharmaceutical Development and Manufacturing Services
         Limited ("PDMS") for the sale and purchase of the U.K. pharmaceutical
         development and manufacturing services business and certain assets of
         Galen Limited, a

                                       43
<PAGE>

           subsidiary of Galen Holdings PLC. Under terms of the agreement, total
           cash consideration was(pound)20 million ($34 million).

-          A Manufacturing, Packaging, Labelling, Testing QP Release, Storage &
           Despatch Agreement, dated December 2, 2003, between Galen Limited and
           Pharmaceutical Development and Manufacturing Services Limited
           ("PDMS"). Under the terms of the agreement, PDMS will continue to
           manufacture, supply, and distribute a number of Galen's products for
           the U.K. and Irish market.

D. EXCHANGE CONTROLS

         There are currently no U.K. laws or regulations that restrict the
import or export of capital or the remittance of dividends or interest to
non-resident holders of our securities. Unrestricted retained earnings available
for payment of dividends as determined under U.K. GAAP at September 30, 2003
were $159,134,000.

E. TAXATION

         The following is a general description of the principal U.S. federal
income tax consequences and certain U.K. tax consequences of the purchase,
ownership and disposition of Galen ordinary shares and Galen ADSs. This
description is for general information purposes only and is based on the tax
laws of the United States (including the Internal Revenue Code of 1986, as
amended, which we refer to as the Code, Treasury regulations promulgated under
the Code, and judicial and administrative interpretations of the Code) and the
United Kingdom, and the income tax convention between the United States and the
United Kingdom, all as in effect on the date of this annual report and all of
which are subject to change, possibly retroactively. On March 31, 2003,
representatives of the United Kingdom and United States exchanged instruments of
ratification for a new income tax convention, which we refer to as the New
Treaty. The provisions of the New Treaty have the force and effect of law from
various dates, but in respect of withholding taxes on dividends apply from May
1, 2003. As discussed below, investors are no longer entitled to claim a special
foreign tax credit in respect of dividends that were available under the terms
of the prior treaty, which we refer to as the Old Treaty, except for a limited
period of time during which investors may elect to apply the entirety of the Old
Treaty in preference to the New Treaty.

         The discussion set forth below is applicable to U.S. holders:

           -        who will hold Galen ordinary shares or Galen ADSs as a
                    capital asset;

           -        who are residents of the United States for purposes of the
                    New Treaty;

           -        whose Galen ordinary shares or Galen ADSs are not, for
                    purposes of the New Treaty, effectively connected with a
                    permanent establishment in the United Kingdom; and

           -        who otherwise qualify for the full benefits of the New
Treaty.

         The tax treatment of a holder of Galen ordinary shares or Galen ADSs
may vary depending upon his or her particular situation and this discussion does
not address the tax treatment of holders subject to special treatment under the
U.S. federal income tax law.

         The U.K. Inland Revenue treats U.S. holders of ADSs as the owner of the
underlying ordinary shares for the purpose of the taxation of dividend payments
under both the New Treaty and the Old Treaty. U.S. holders of Galen ADSs are
also treated as the owners of the underlying shares for the purposes of the
Code.

         For purposes of this discussion, a "U.S. holder" is any beneficial
owner of Galen ordinary shares or Galen ADSs that is:

           -       an individual citizen or resident of the United States;

           -       a corporation or partnership created or organized in or under
                   the laws of the United States or any political subdivision of
                   the United States;

           -       an estate the income of which is subject to U.S. federal
                   income tax without regard to its source; or

           -       a trust:

                                       44
<PAGE>

           -        if a court within the United States is able to exercise
                    primary supervision over the administration of the trust and
                    one or more U.S. persons have the authority to control all
                    substantial decisions of the trust; or

           -        that has a valid election in effect under applicable U.S.
                    Treasury regulations to be treated as a U.S. person.

         If a partnership holds Galen ordinary shares or Galen ADSs, the tax
treatment of a partner will generally depend upon the status of the partner and
the activities of the partnership. If you are a partner of a partnership holding
Galen ordinary shares or Galen ADSs, you should consult your tax advisors.

         The discussion below does not address the effect of any U.S. state or
local tax law on a holder of Galen ordinary shares or Galen ADSs nor any U.S.
alternative minimum tax consequences. In addition, the discussion below does not
address the effect of any tax law of any jurisdiction other than the United
States and the United Kingdom. This summary is not intended to be, nor should it
be construed to be, legal or tax advice. Investors are urged to consult their
own tax advisors regarding the U.S. federal, state and local and the U.K. and
other tax consequences of their purchase, ownership and disposition of Galen
ordinary shares or Galen ADSs.

UNITED KINGDOM ESTATE AND GIFT TAX

         A Galen ADS or Galen ordinary share held by an individual shareholder
who for the purposes of the estate and gift tax convention between the United
States and the United Kingdom (the "Estate and Gift Tax Convention") is
domiciled in the United States and is not a national of the United Kingdom for
that purpose will not be subject to U.K. inheritance tax on the individual's
death (whether held on the date of death or given during the individual's
lifetime) except in the exceptional case where the Galen ADS or Galen ordinary
share is part of the business property of a U.K. permanent establishment of the
individual or pertains to a U.K. fixed base of an individual who performs
independent personal services. In general terms and subject to any applicable
exemptions and refunds, under U.K. law inheritance tax may be charged on the
value of certain transfers made on the death of an individual or within the
seven years before his death or during his lifetime. For U.S. estate and gift
tax purposes, the transfer of an ADS by a U.S. citizen or resident will be
treated in the same manner as the transfer of any other asset and will be
subject to U.S. estate or gift tax. In a case where a Galen ADS or Galen
ordinary share is subject both to U.K. inheritance tax and U.S. federal gift or
estate tax, the Estate and Gift Tax Convention generally provides for tax paid
in one jurisdiction to be credited against tax payable in the other jurisdiction
based on priority rules set forth in that convention.

UNITED KINGDOM STAMP DUTY AND STAMP DUTY RESERVE TAX

         U.K. stamp duty is payable in respect of certain documents and U.K.
stamp duty reserve tax ("SDRT") is imposed in respect of certain transactions in
securities. Transfers of Galen ordinary shares will be subject to ad valorem
stamp duty at the rate of 0.5% (rounded up to the nearest (pound)5) of the full
consideration given irrespective of the identity of the parties to the transfer
and the place of execution of any instrument of transfer. Where such ordinary
shares are later transferred to the depositary's nominee, further stamp duty or
SDRT will normally be payable at the rate of 1.5% of the open market value of
the ordinary shares at the time of the transfer. However, where ordinary shares
being acquired are transferred direct to the depositary's nominee, the only
charge will generally be the higher of 1.5% of the price payable for the
ordinary shares so acquired. There is generally no ad valorem stamp duty on a
gift or on an instrument of transfer that is neither a sale nor made in
contemplation of a sale. In those cases, the instrument of transfer will either
be exempt from stamp duty or a fixed stamp duty of (pound)5 per instrument of
transfer will be payable.

         An agreement to transfer Galen ordinary shares or any interest therein
(but not an agreement to transfer an interest in an ADS) for money or money's
worth will normally give rise to a charge to SDRT at a rate of 0.5% of the
amount or value of the consideration given.

         No U.K. stamp duty or SDRT will be payable on the transfer of or
agreement to transfer an ADS or beneficial ownership of an ADS so long as the
instrument of transfer and/or written agreement to transfer is executed and
remains at all times outside the United Kingdom and so long as any instrument of
transfer and/or written agreement to transfer is not executed in the United
Kingdom and the transfer does not relate to any matter or thing done or to be
done in the United Kingdom. In any other case, the transfer of or agreement to
transfer an ADS or beneficial ownership of an ADS could depending on all the
circumstances of the transfer give rise to a charge to ad valorem stamp duty.
The current rate

                                       45
<PAGE>

of ad valorem stamp duty on the transfer of stock or marketable securities that
would include the ordinary shares and ADSs is 0.5% of the value of the
consideration.

DISTRIBUTIONS

         There is no U.K. withholding tax on dividends. For U.S. federal income
tax purposes, distributions with respect to the Galen ordinary shares or Galen
ADSs generally will be taxed to you as ordinary dividend income, to the extent
that the distributions do not exceed Galen's current and accumulated earnings
and profits. Such dividends will not be eligible for the dividends received
deduction generally allowed to a U.S. corporation under Section 243 of the Code.
Distributions, if any, in excess of Galen's current and accumulated earnings and
profits will constitute a nontaxable return of capital and will be applied
against and reduce the tax basis in your hands of the Galen ordinary shares or
Galen ADSs. To the extent that these distributions exceed your tax basis in the
Galen ordinary shares or Galen ADSs, the excess generally will be treated as
capital gain. For U.S. foreign tax credit purposes, dividends paid on the Galen
ordinary shares and Galen ADSs will generally be treated as foreign-source
income and as "passive income" or, in the case of certain U.S. holders,
"financial services income."

         The amount of any dividend paid in pounds sterling will equal the U.S.
dollar value of the pounds sterling received calculated by reference to the
exchange rate in effect on the date you receive the dividend, in the case of
Galen ordinary shares or on the date of receipt by the depositary, in the case
of Galen ADSs, regardless of whether the pounds sterling are converted into U.S.
dollars on this date. If the pounds sterling received as a dividend are not
converted into U.S. dollars on the date of receipt, you will have a basis in the
pounds sterling equal to their U.S. dollar value on the date of receipt.
Generally, any gain or loss realized on a subsequent conversion or other
disposition of the pounds sterling will be treated as ordinary income or loss.

         With respect to U.S. holders who are individuals, certain dividends
received before January 1, 2009 from a qualified foreign corporation may be
subject to reduced rates of taxation. A qualified foreign corporation includes a
foreign corporation that is eligible for the benefits of a comprehensive income
tax treaty with the United States which the United States Treasury Department
determines to be satisfactory for these purposes and which includes an exchange
of information program. United States Treasury Department guidance indicates
that the United Kingdom is a country with which the United States has a treaty
in force that meets these requirements, and Galen believes it is eligible for
the benefits of that treaty. Individuals that do not meet a minimum holding
period requirement during which they are not protected from the risk of loss or
that elect to treat the dividend income as "investment income" pursuant to
section 163(d)(4) of the Code will not be eligible for the reduced rates of
taxation regardless of the trading status of Galen's ADSs. In addition, the rate
reduction will not apply to dividends if the recipient of a dividend is
obligated to make related payments with respect to positions in substantially
similar or related property. This disallowance applies even if the minimum
holding period has been met. U.S. holders should consult their own tax advisors
regarding the application of these rules given their particular circumstances.

SPECIAL FOREIGN TAX CREDIT BENEFITS UNDER OLD TREATY

         Investors who qualified for benefits under the Old Treaty were
eligible, subject to generally applicable limitations, to receive a special US
foreign tax credit equal to one-ninth of the amount of certain cash dividends
that they received on the Galen ordinary shares or Galen ADSs, so long as they
made an election to include in their income, as an additional notional dividend,
an amount equal to the tax credit.

         This foreign tax credit benefit is not available under the New Treaty,
and thus generally is unavailable with respect to dividends paid after May 1,
2003. However, the New Treaty provides for an election pursuant to which persons
eligible for the benefits of the Old Treaty may elect to apply the Old Treaty in
its entirety, in lieu of the New Treaty, for an optional 12-month extension
period. Thus, if an investor were to elect the application of the Old Treaty,
that investor could obtain the special foreign tax credit benefit described
above with respect to any dividends received on the Galen ordinary shares or
Galen ADSs prior to May 1, 2004. Investors should consult their own tax advisers
regarding their potential eligibility for this foreign tax credit benefit, as
well as the procedure for electing the application of the Old Treaty and for
including in income the additional notional dividend described above. Investors
should be aware that such an election will mean the Old Treaty applies in its
entirety during the transitional period, and not just to particular dividends.

                                       46
<PAGE>

SALE OR EXCHANGE

         Upon a sale or exchange of Galen ordinary shares or Galen ADSs, you
will generally recognize a gain or loss for U.S. federal income tax purposes in
an amount equal to the difference between the amount realized on the sale or
exchange and the adjusted tax basis in your hands of the Galen ordinary shares
or Galen ADSs. Such gain or loss will be capital gain or loss and will be
long-term capital gain or loss if you have held the Galen ordinary shares or
Galen ADSs for more than one year. Long-term capital gains of individuals are
eligible for reduced rates of taxation. The deductibility of capital losses is
subject to limitations.

         Gain or loss recognized by a U.S. holder on the sale or exchange of
Galen ordinary shares or Galen ADSs generally would be treated as United
States-source gain or loss for U.S. foreign tax credit purposes.

         A non-corporate U.S. holder who is not resident or ordinarily resident
for U.K. tax purposes in the United Kingdom will not be liable for U.K. taxation
on capital gains realized or accrued on the sale or other disposals of Galen
ordinary shares or ADSs unless the U.S. holder (i) carries on a trade or
profession or vocation in the United Kingdom through a branch or agency and such
Galen ordinary shares or ADSs are or have been used, held or acquired for the
purposes of such trade, profession or vocation; or (ii) is an individual who
has, after March 16, 1998, ceased to be resident or ordinarily resident in the
United Kingdom for tax purposes for a period of less than five years of
assessment and also disposes of Galen ordinary shares or ADSs during that
period.

INFORMATION REPORTING AND BACKUP WITHHOLDING

         In general, U.S. information reporting requirements will apply to:

         -        dividends in respect of the Galen ordinary shares or Galen
                  ADSs that are paid to U.S. holders other than certain exempt
                  recipients (such as corporations), or

         -        the proceeds received on the sale, exchange, or redemption of
                  the Galen ordinary shares or Galen ADSs that are paid within
                  the United States (and in certain cases, outside of the United
                  States) to U.S. holders other than certain exempt recipients
                  (such as corporations).

         A backup withholding tax may apply to such amounts if the U.S. holder
fails to provide an accurate taxpayer identification number or to report
interest and dividends required to be shown on its federal income tax returns.
The amount of any backup withholding from a payment to a U.S. holder will be
allowed as a credit against the U.S. holder's U.S. federal income tax liability.

H. DOCUMENTS ON DISPLAY

         Documents concerning Galen which are referred to in this annual report
may be inspected at our U.S. offices in Rockaway, New Jersey. Written or oral
requests for an appointment to inspect any such document should be directed to
Company Secretary, c\o Warner Chilcott, 100 Enterprise Drive, Suite 280,
Rockaway, New Jersey 07866, telephone (800) 521-8813.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The principal market risk (i.e., the risk of loss arising from adverse
changes in market rates and prices) to which Galen is exposed is interest rates
on debt.

         The following risk management discussion and the estimated amounts
generated from analytical techniques are forward-looking statements of market
risk assuming certain market conditions occur. Actual results in the future may
differ materially from these projected results due to actual developments in the
global financial markets.

  INTEREST RATES

         Galen manages debt and overall financing strategies centrally using a
combination of short and long term loans with either fixed or variable rates.
Currently, Galen does not hedge exposure to interest rate fluctuations through
the use of derivative instruments.

                                       47
<PAGE>

         Based on variable rate debt levels of $295 million and $0.8 million as
of September 30, 2003 and 2002, respectively, a 1% change in interest rates
would impact net interest expense by approximately $3 million and nil for the
year ended September 30, 2003 and 2002, respectively. Fixed rate debt
outstanding has been excluded from the above interest sensitivity analysis.

  INFLATION

         Inflation had no material impact on our operations during the years
ended September 30, 2003, 2002 and 2001.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES.

         Not applicable.

                                       48
<PAGE>

                                     PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

   None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITIES HOLDERS AND USE OF
PROCEEDS.

   None.

ITEM 15. CONTROLS AND PROCEDURES

   (a)   Evaluation of Disclosure Controls and Procedures. Galen's management,
with the participation of Galen's chief executive officer and chief financial
officer, have evaluated the effectiveness of the design and operation of Galen's
disclosure controls and procedures (as defined in Exchange Act Rule 13a - 15(e))
as of the end of the fiscal year. Based on that evaluation, the chief executive
officer and chief financial officer have concluded that Galen's disclosure
controls and procedures are effective to ensure that information required to be
disclosed by Galen relating to Galen and its consolidated subsidiaries is made
known to such officers by others within these entities, particularly during the
period this annual report was prepared, in order to allow timely decisions
regarding disclosure.

   (b)   Internal Controls Over Financial Reporting. Galen's management, with
the participation of Galen's chief executive officer and chief financial
officer, also conducted an evaluation of the internal control over financial
reporting to determine whether any changes occurred during the period covered by
this report that have materially affected, or are reasonably likely to
materially affect, Galen's internal control over financial reporting. Based on
that evaluation, there has been no such change during the period covered by this
report.

ITEM 16. [RESERVED]

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT.

         The Board of Directors has determined that Dr. Harold Ennis is the
financial expert serving on its Audit Committee.

ITEM 16B. CODE OF ETHICS.

         We have adopted a code of ethics applicable to our employees, including
our directors and senior management. A copy of the code of ethics is posted on
Galen's website, www.galenplc.com. The information on this website is not
incorporated by reference in this annual report.

                                       49
<PAGE>

                                    PART III

ITEM 17. FINANCIAL STATEMENTS.

         Not applicable.

ITEM 18. FINANCIAL STATEMENTS.

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                 Page
                                                                                                 ----
<S>                                                                                              <C>
Report of the Independent Accountants...................................................          51

Consolidated Balance Sheets as of September 30, 2003 and 2002...........................          52

Consolidated Statements of Operations for the Three Years Ended
     September 30, 2003.................................................................          53

Consolidated Statements of Shareholders' Equity for the
     Three Years ended September 30, 2003...............................................          54

Consolidated Statements of Comprehensive Income for the
     Three Years Ended September 30, 2003...............................................          55

Consolidated Statements of Cash Flows for the Three Years Ended
     September 30, 2003.................................................................          56

Notes to the Consolidated Financial Statements..........................................          57

Financial Statement Schedule:

     Valuation and Qualifying Accounts..................................................          81
</TABLE>

                                       50
<PAGE>

                      REPORT OF THE INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Galen Holdings PLC.

         In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Galen Holdings PLC and its subsidiaries at September 30, 2002 and
2003, and the results of their operations and their cash flows for each of the
three years in the period ended September 30, 2003 in conformity with accounting
principles generally accepted in the United States of America. In addition, in
our opinion the financial statement schedule listed in the accompanying index
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
These financial statements and the financial statement schedule are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements and the financial statement schedule based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

                                            PricewaterhouseCoopers LLP

Belfast
Northern Ireland
December 22, 2003

                                        51
<PAGE>

                               GALEN HOLDINGS PLC
                           CONSOLIDATED BALANCE SHEETS
              (IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                                SEPTEMBER 30,
                                                                                        ----------------------------
                                                                                           2003             2002
                                                                                        -----------      -----------
<S>                                                                                     <C>              <C>
ASSETS
     Current Assets:
        Cash and cash equivalents                                                       $    89,073      $   313,012
        Accounts receivable, net                                                             38,042           32,869
        Inventories                                                                          32,808           26,902
        Deferred tax asset                                                                       --            7,718
        Prepaid expense and other current assets                                              6,808            4,397
                                                                                        -----------      -----------
           Total current assets                                                             166,731          384,898
                                                                                        -----------      -----------
     Property, plant and equipment, net                                                      64,594           63,394
     Intangible assets, net                                                               1,109,106          381,731
     Goodwill, net                                                                          224,934          242,208
                                                                                        -----------      -----------
           Total assets                                                                 $ 1,565,365      $ 1,072,231
                                                                                        ===========      ===========
LIABILITIES
     Current Liabilities:
        Accounts payable                                                                $    19,592      $    14,007
        Accrued and other current liabilities                                                70,848           44,053
        Current installments of long-term debt                                              103,088              616
        Current installments of obligations under capital leases                                233              392
        Income taxes                                                                         17,442           11,052
                                                                                        -----------      -----------
           Total current liabilities                                                        211,203           70,120
                                                                                        -----------      -----------
      Other Liabilities:
         Long-term debt, excluding current installments                                     239,065           50,729
         Long-term obligations under capital leases, excluding current installments               3              224
         Deferred income taxes                                                              112,038           35,962
         Other non-current liabilities                                                        5,931            6,189
                                                                                        -----------      -----------
            Total liabilities                                                               568,240          163,224
                                                                                        -----------      -----------
SHAREHOLDERS' EQUITY
     Ordinary shares, par value L 0.10 per share; 250,000,000 (2002:
        250,000,000) shares authorized, 188,209,895 shares issued and
        outstanding at September 30, 2003, and 187,805,263 shares issued and
        outstanding at September 30, 2002                                                    30,046           29,981
     Additional paid-in capital                                                             676,528          677,417
     Retained earnings                                                                      278,720          191,806
     Treasury stock                                                                         (23,638)         (23,893)
     Accumulated other comprehensive income                                                  35,469           33,696
                                                                                        -----------      -----------
        Total shareholders' equity                                                          997,125          909,007
                                                                                        -----------      -----------
        Total liabilities and shareholders' equity                                      $ 1,565,365      $ 1,072,231
                                                                                        ===========      ===========
</TABLE>

           See accompanying notes to consolidated financial statements

                                       52
<PAGE>

                               GALEN HOLDINGS PLC
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              (IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                                    YEAR ENDED SEPTEMBER 30,
                                                                      ----------------------------------------------------
                                                                           2003               2002               2001
                                                                      --------------     --------------     --------------
<S>                                                                   <C>                <C>                <C>
REVENUES
     Products                                                         $      432,262     $      235,221     $      183,822
                                                                      --------------     --------------     --------------
OPERATING EXPENSES
     Cost of sales (excluding depreciation shown below)                       72,656             51,550             44,243
     Selling, general and administrative                                     135,875             64,530             64,760
     Research and development                                                 28,685             19,783             13,694
     Depreciation                                                              6,844              5,323              4,303
     Amortization                                                             42,323             19,497             26,185
                                                                      --------------     --------------     --------------
        Total operating expenses                                             286,383            160,683            153,185
                                                                      --------------     --------------     --------------
OPERATING INCOME                                                             145,879             74,538             30,637
                                                                      --------------     --------------     --------------
OTHER INCOME (EXPENSE)
     Interest income                                                           3,188             10,816              6,319
     Interest expense                                                        (11,252)           (29,652)           (22,360)
                                                                      --------------     --------------     --------------
        Total other income (expense)                                          (8,064)           (18,836)           (16,041)
                                                                      --------------     --------------     --------------
INCOME BEFORE TAXES                                                          137,815             55,702             14,596
                                                                      --------------     --------------     --------------
Provision for income taxes                                                    41,660             18,654              6,011
                                                                      --------------     --------------     --------------
INCOME FROM CONTINUING OPERATIONS                                             96,155             37,048              8,585
                                                                      --------------     --------------     --------------
DISCONTINUED OPERATIONS
      Income from discontinued operations (net of tax
            charge of $2,213; 2001: $3,666)                                        -              7,037              7,841
      Gain on disposal of discontinued operations
            (net of tax charge of $3,893)                                          -            101,091                  -
                                                                      --------------     --------------     --------------
NET INCOME                                                            $       96,155     $      145,176     $       16,426
                                                                      --------------     --------------     --------------
BASIC AND DILUTED NET INCOME PER ORDINARY SHARE:
        - continuing operations                                       $         0.52     $         0.20     $         0.05
        - earnings from discontinued operations                                    -               0.04               0.05
        - gain on disposal of discontinued operations                              -               0.54                  -
                                                                      --------------     --------------     --------------
               Basic and diluted net income per ordinary share        $         0.52     $         0.78     $         0.10
                                                                      ==============     ==============     ==============
BASIC NET INCOME PER ADS:
        - continuing operations                                       $         2.10     $         0.80     $         0.21
        - earnings from discontinued operations                                    -               0.15               0.20
        - gain on disposal of discontinued operations                              -               2.18                  -
                                                                      --------------     --------------     --------------
               Basic net income per ADS                               $         2.10     $         3.13     $         0.41
                                                                      --------------     --------------     --------------
DILUTED NET INCOME PER ADS:
        - continuing operations                                       $         2.08     $         0.80     $         0.21
        - earnings from discontinued operations                                    -               0.15               0.19
        - gain on disposal of discontinued operations                              -               2.17                  -
                                                                      --------------     --------------     --------------
               Diluted net income per ADS                             $         2.08     $         3.12     $         0.40
                                                                      --------------     --------------     --------------
WEIGHTED AVERAGE ORDINARY SHARES OUTSTANDING:
     Basic                                                               183,574,057        185,244,963        161,354,740
                                                                      --------------     --------------     --------------
     Diluted                                                             184,504,240        186,330,634        164,160,276
                                                                      --------------     --------------     --------------
WEIGHTED AVERAGE ADS EQUIVALENTS OUTSTANDING:
     Basic                                                                45,893,514         46,311,241         40,338,685
                                                                      --------------     --------------     --------------
     Diluted                                                              46,126,060         46,582,659         41,040,069
                                                                      ==============     ==============     ==============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       53
<PAGE>


                               GALEN HOLDINGS PLC
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
              (IN THOUSANDS OF U.S. DOLLARS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                             NUMBER OF
                                                            EQUIVALENT
                                                               ADSs
                                             NUMBER OF    (REPRESENTING                    ADDITIONAL
                                             ORDINARY     FOUR ORDINARY       SHARE          PAID-IN
                                              SHARES         SHARES)         CAPITAL         CAPITAL
                                            -----------   -------------   -------------   -------------
<S>                                         <C>           <C>             <C>             <C>
BALANCE AT SEPTEMBER 30, 2000               158,965,206    39,741,302     $      25,498   $     399,656
     Net income                                       -             -                 -               -
     Dividends declared - $0.13 per ADS               -             -                 -               -
     Shares issued net of costs              30,346,092     7,586,523             4,404         269,081
     Exchange difference                              -             -                 -               -
     Treasury stock disposals                         -             -                 -            (506)
     Stock compensation expense                       -             -                 -           4,913
                                            -----------    ----------     -------------   -------------
BALANCE AT SEPTEMBER 30, 2001               189,311,298    47,327,825            29,902         673,144
     Net income                                       -             -                 -               -
     Dividends declared - $0.16 per ADS               -             -                 -               -
     Shares issued net of costs                 543,965       135,991                79           3,973
     Shares repurchased                      (2,050,000)     (512,500)                -               -
     Exchange difference                              -             -                 -               -
     Treasury stock disposals                         -             -                 -             (29)
     Stock compensation expense                       -             -                 -             329
                                            -----------    ----------     -------------   -------------
BALANCE AT SEPTEMBER 30, 2002               187,805,263    46,951,316            29,981         677,417
     Net income                                       -             -                 -               -
     Dividends declared - $0.21 per ADS               -             -                 -               -
     Shares issued net of costs                 404,632       101,158                65             470
     Exchange difference                              -             -                 -               -
     Treasury stock disposals                         -             -                 -            (255)
     Stock compensation expense                       -             -                 -          (1,104)
                                            -----------    ----------     -------------   -------------
BALANCE AT SEPTEMBER 30, 2003               188,209,895    47,052,474     $      30,046   $     676,528
                                            ===========    ==========     =============   =============
<CAPTION>
                                                                               ACCUMU-
                                                                             LATED OTHER
                                                                               COMPRE-
                                                                               HENSIVE
                                               RETAINED       TREASURY         INCOME
                                               EARNINGS        STOCK            (LOSS)          TOTAL
                                            -------------   -------------   -------------   -------------
<S>                                         <C>             <C>             <C>             <C>
BALANCE AT SEPTEMBER 30, 2000               $      42,568   $     (11,950)  $     (11,503)  $     444,269
     Net income                                    16,426               -               -          16,426
     Dividends declared - $0.13 per ADS            (5,012)              -               -          (5,012)
     Shares issued net of costs                         -               -               -         273,485
     Exchange difference                                -               -           4,102           4,102
     Treasury stock disposals                           -             506               -               0
     Stock compensation expense                         -               -               -           4,913
                                            -------------   -------------   -------------   -------------
BALANCE AT SEPTEMBER 30, 2001                      53,982         (11,444)         (7,401)        738,183
     Net income                                   145,176               -               -         145,176
     Dividends declared - $0.16 per ADS            (7,352)              -               -          (7,352)
     Shares issued net of costs                         -               -               -           4,052
     Shares repurchased                                 -         (12,478)              -         (12,478)
     Exchange difference                                -               -          41,097          41,097
     Treasury stock disposals                           -              29               -               0
     Stock compensation expense                         -               -               -             329
                                            -------------   -------------   -------------   -------------
BALANCE AT SEPTEMBER 30, 2002                     191,806         (23,893)         33,696         909,007
     Net income                                    96,155               -               -          96,155
     Dividends declared - $0.21 per ADS            (9,241)              -               -          (9,241)
     Shares issued net of costs                         -               -               -             535
     Exchange difference                                -               -           1,773           1,773
     Treasury stock disposals                                         255               -               -
     Stock compensation expense                         -               -               -          (1,104)
                                            -------------   -------------   -------------   -------------
BALANCE AT SEPTEMBER 30, 2003               $     278,720   $     (23,638)  $      35,469   $     997,125
                                            =============   =============   =============   =============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       54
<PAGE>

                               GALEN HOLDINGS PLC
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                         (IN THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
                                                                                  YEARS ENDED SEPTEMBER 30,
                                                                      -------------------------------------------------
                                                                           2003              2002              2001
                                                                      -------------     -------------     -------------
<S>                                                                   <C>               <C>               <C>
NET INCOME                                                            $      96,155     $     145,176     $      16,426
                                                                      -------------     -------------     -------------
   Other comprehensive income:
      Foreign currency translation adjustment                                 1,773            41,097             4,102
                                                                      -------------     -------------     -------------
         Other comprehensive income                                           1,773            41,097             4,102
                                                                      -------------     -------------     -------------
COMPREHENSIVE INCOME                                                  $      97,928     $     186,273     $      20,528
                                                                      =============     =============     =============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       55
<PAGE>

                               GALEN HOLDINGS PLC
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (IN THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
                                                                                             YEARS ENDED SEPTEMBER 30,
                                                                                   ------------------------------------------
                                                                                       2003           2002           2001
                                                                                   ------------   ------------   ------------
<S>                                                                                <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                      $     96,155   $    145,176   $     16,426
   Adjustments to reconcile net income to net cash provided by
     operating activities:
         Depreciation                                                                     6,844          8,751          8,902
         Amortization                                                                    42,323         19,497         27,269
         Profit on sale of businesses                                                         -       (104,984)             -
         Loss on sale of assets                                                             240              -             37
         Amortization of government grants                                               (1,135)        (1,576)        (2,016)
         Loan notes premium adjustment                                                     (265)        (3,723)             -
         Stock compensation expense                                                      (1,301)           323          4,913
         Minority interest                                                                    -             47            177
         Changes in assets and liabilities:
            Increase in accounts receivable, prepaid expense and other assets            (7,584)       (12,859)        (8,387)
            Increase in inventories                                                      (5,906)        (3,005)        (2,098)
            Increase in accounts payable, accrued liabilities and
               other liabilities                                                         24,851          4,535         10,389
         Income taxes                                                                    10,528         19,357          2,572
         Foreign exchange (loss) / gain                                                    (673)         1,839         (5,271)
                                                                                   ------------   ------------   ------------
               Net cash provided by operating activities                                164,077         73,378         52,913
                                                                                   ------------   ------------   ------------
CASH  FLOWS FROM INVESTING ACTIVITIES:
   Purchase of intangible assets                                                       (664,229)       (42,037)       (93,898)
   Purchase of fixed assets                                                              (6,164)       (17,301)       (23,568)
   Proceeds from sale of businesses                                                           -        228,574              -
   Deferred consideration and acquisition costs                                            (324)        (8,772)       (23,705)
   Proceeds from sale of fixed assets                                                        40              -            367
                                                                                   ------------   ------------   ------------
             Net cash (used in) / provided by investing activities                     (670,677)       160,464       (140,804)
                                                                                   ------------   ------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Loan notes repaid                                                                     (2,925)      (111,300)       (40,300)
   Long-term debt obtained                                                              350,000              -         72,382
   Long-term debt repaid                                                                (55,915)      (138,010)             -
   Payments under capital leases                                                           (414)          (557)          (577)
   Purchase of own shares                                                                     -        (12,478)             -
   Proceeds from share capital issue, net of expenses                                       535            156        272,993
   Cash dividends paid                                                                   (9,241)        (7,352)        (5,012)
   Government grants received                                                               530          2,241            659
                                                                                   ------------   ------------   ------------
            Net cash provided by / (used in) financing activities                       282,570       (267,300)       300,145
                                                                                   ------------   ------------   ------------
   Net (decrease) / increase in cash and cash equivalents                              (224,030)       (33,458)       212,254
   Cash and cash equivalents, beginning of year                                         313,012        326,076        113,671
   Foreign exchange adjustment on cash and cash equivalents                                  91         20,394            151
                                                                                   ------------   ------------   ------------
   Cash and cash equivalents, end of year                                          $     89,073   $    313,012   $    326,076
                                                                                   ============   ============   ============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid                                                                      $     11,502   $     35,187   $     25,752
Income taxes paid                                                                  $     31,243   $      6,636   $      1,609
Non-cash investing and financing activities
   Acquisitions of equipment through capital leases                                $          -   $          -   $        710
   Common stock issued for acquisitions                                            $          -   $        956   $          -
   Acquisition of fixed assets through accrued liabilities                         $      8,436   $          -   $          -
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       56
<PAGE>

                               GALEN HOLDINGS PLC
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF OPERATIONS AND PRINCIPLES OF CONSOLIDATION

         Galen Holdings PLC ("Galen" or the "Company") is a Northern Ireland
public limited company based in Craigavon, Northern Ireland and Rockaway, New
Jersey. The Company was founded in 1968, listed its ordinary shares on the
London and Irish stock exchanges in 1997 and listed its American Depositary
Receipt form, on NASDAQ(R) in September 2000. Galen is an international
pharmaceutical company focused principally on the therapeutic areas of women's
healthcare and dermatology. Galen's pharmaceutical products are promoted by the
Company's sales and marketing organizations in the United States, United Kingdom
and Republic of Ireland.

         The consolidated financial statements include the financial statements
of Galen and all of its majority owned subsidiaries. Galen does not presently
hold investments in any entities that are not majority owned, nor does it have
any majority owned subsidiary in which it does not have a controlling financial
interest. All intercompany transactions and account balances have been
eliminated on consolidation. During the years 2000 through 2003 the Company
completed several acquisitions, which were accounted for under the purchase
method of accounting. The consolidated financial statements include the results
of operations from each of these business combinations as of the date of
acquisition. Additional disclosure related to the Company's acquisitions is
provided in Note 2.

USE OF ESTIMATES IN FINANCIAL STATEMENTS

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

BASIS OF PRESENTATION

         These financial statements have been prepared in accordance with
accounting principles generally accepted in the United States ("U.S. GAAP").

FOREIGN CURRENCY

         The Company has operations in the United States, United Kingdom and the
Republic of Ireland. Generally, the Company generates revenues and incurs
expenses as follows: U.S. dollars in the United States and the Republic of
Ireland, and pounds sterling in the United Kingdom. The Company has determined
that the functional currency of each operation is the respective local currency,
with the exception of the parent Company and Galen (Chemicals), a Republic of
Ireland subsidiary whose functional currency is the U.S. dollar. The results of
our overseas operations, whose functional currencies are not the U.S. dollar,
are translated at the average rate of exchange during the period. Assets and
liabilities are translated at the rate of exchange prevailing on the balance
sheet date. Translation adjustments are reflected in shareholders' equity and
are included as a component of comprehensive income.

REVENUE RECOGNITION

         Revenue from product sales is recognized upon shipment of products to
the customer. The Company warrants products against defects and for specific
quality standards, permitting the return of products under certain
circumstances. Product sales are recorded net of trade discounts, sales returns,
rebates, value-added tax and similar taxes, and intercompany transactions.

                                       57
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

RESEARCH AND DEVELOPMENT

         Research and development costs are expensed as incurred.

PENSIONS AND 401(K) PLAN

         Retirement benefits are provided for U.K. employees through a defined
contribution pension scheme whereby the assets of the scheme are held separately
from those of the Company in an independently administered scheme. Contributions
are charged to the income statement as they become payable. The Company also
makes contributions to a 401(k) savings plan for its U.S. employees (see Note
21).

STOCK BASED COMPENSATION

         The Company accounts for stock option grants in accordance with the
provisions of Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations, and includes
appropriate disclosures as required by Statement of Financial Accounting
Standards ("SFAS") No. 123 "Accounting for Stock-Based Compensation" and SFAS
No. 148 "Accounting for Stock-Based Compensation - Transition and Disclosure, an
amendment of FASB Statement No. 123".

REVENUE GRANTS

         Revenue grants relating to research and development expenditures are
credited in the statement of operations as a reduction of operating expenses in
the period in which the related expenditure is incurred.

CAPITAL GRANTS

         Capital grants are recorded as deferred revenue and are amortized to
the income statement over the expected useful lives of the related assets.

INCOME TAXES

         The Company provides for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Deferred tax assets and liabilities are provided
for differences between the financial statement and tax bases of assets and
liabilities that will result in future taxable or deductible amounts. The
deferred tax assets and liabilities are measured using the enacted tax laws and
rates applicable to the periods in which the differences are expected to affect
taxable income. Income tax expense is computed as the tax payable or refundable
for the period plus or minus the change during the period in deferred tax assets
and liabilities.

         Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of
the deferred tax assets will not be realized.

FINANCIAL INSTRUMENTS

         The Company did not have derivative financial instruments at any time
during the fiscal year; disclosure is therefore limited to primary financial
instruments. The Company considers all liquid interest earning investments with
original maturities of ninety days or less to be cash equivalents. Investments
with maturities between ninety days and one year are considered short-term
investments. Cash, cash equivalents and short-term investments are stated at
cost plus accrued interest, which approximates market value.

                                       58
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

INVENTORIES

         Inventories are stated at the lower of cost or net realizable value.
Cost is determined on a first in, first out basis and includes transportation
and handling costs. In the case of manufactured products, cost includes
material, labor and applicable manufacturing overhead. Provisions are made for
obsolete, slow moving or defective items where appropriate.

CASH AND CASH EQUIVALENTS

         Cash and cash equivalents consist primarily of cash on deposit and
money market accounts with original maturities of three months or less.

PROPERTY, PLANT AND EQUIPMENT

         The cost of fixed assets is their purchase cost together with any
incidental expenses of acquisition. Plant, property and equipment are
depreciated over their estimated useful lives. Interest incurred as part of the
cost of constructing fixed assets is capitalized and amortized over the life of
the asset. No depreciation is charged on land. The estimated useful lives used
by the Company to calculate depreciation are:

<TABLE>
<CAPTION>
                                                     Life in Years
                                                     -------------
<S>                                                  <C>
Buildings                                                    50
Plant and machinery                                          10
Motor vehicles                                                4
Fixtures and fittings                                   5 to 10
</TABLE>

         Assets acquired under capital leases are included in the balance sheet
as fixed assets and are depreciated over the shorter of the period of the lease
or their useful lives. The capital elements of future lease payments are
recorded as liabilities, while the interest elements are charged to the income
statement over the period of the leases to give a constant charge on the balance
of the capital repayments outstanding.

INTANGIBLE ASSETS AND GOODWILL

         Intangible assets include trademarks, patents and other intellectual
property acquired by the Company, and are being amortized on a straight-line
basis over 20 years. Where events or circumstances are present which indicate
that the carrying amount of an intangible asset may not be recoverable, the
Company estimates the future undiscounted cash flows expected to result from the
use of the asset and its eventual disposition. To the extent that this
estimation indicates that undiscounted cash flows are not expected to be
adequate to recover the carrying amounts, the assets are written down to
discounted cash flows. Otherwise, no loss is recognized. Goodwill represents
costs in excess of the fair value of net assets of businesses acquired by the
Company.

         Effective October 1, 2001 the Company adopted the provisions of
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets ("SFAS 142"). SFAS 142 provides that goodwill no longer be
amortized and the value of identifiable intangible assets be amortized over
their useful life, unless the asset is determined to have an indefinite useful
life. The Company has determined that none of its intangible assets are deemed
to have an indefinite life. In accordance with SFAS 142, and upon adoption, the
Company reclassified a total of $2,914 to goodwill from intangible assets (net),
representing the assembled workforce associated with the Company's acquisition
of Warner Chilcott. Pursuant to SFAS 142, the Company's goodwill is no longer
amortized effective October 1, 2001 and the Company is required to perform a
periodic impairment test for goodwill. Goodwill is tested for impairment at a
level of reporting referred to as a reporting unit. To identify potential
impairment, the fair value of each reporting unit is compared with its carrying
amount including goodwill. If the fair value of the reporting unit is less than
its carrying value, goodwill is deemed to be potentially impaired. The Company
has completed this impairment test as of June 30, 2003 and has determined that
goodwill has not been impaired.

                                       59
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

NEW ACCOUNTING PRONOUNCEMENTS

         Galen adopted Statement of Financial Accounting Standards No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS 144"),
effective October 1, 2001. The objectives of SFAS 144 are to address significant
issues relating to the implementation of Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of ("SFAS 121"), and to develop a single
accounting model based on the framework established in SFAS 121, for long-lived
assets to be disposed of by sale. SFAS 144 requires that long-lived assets that
are to be disposed of by sale be measured at the lower of book value or fair
value less cost to sell. Additionally, SFAS 144 expands the scope of
discontinued operations to include all components of an entity with operations
that can be distinguished from the rest of the entity in a disposal transaction.
The results of Galen's Pharmaceutical Services operating segment, divested
during the year ended September 30, 2002, were treated as "discontinued
operations."

         On April 30, 2002, the FASB issued Statement of Financial Accounting
Standards No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections ("SFAS 145"). Among other
amendments and rescissions, SFAS No.145 eliminates the requirement that gains
and losses from the extinguishment of debt be aggregated and, if material,
classified as an extraordinary item, net of the related income tax effect,
unless such gains and losses meet the criteria in paragraph 20 of Accounting
Principles Board Opinion No. 30, Reporting the Results of Operations, Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions. Generally, SFAS 145 is
effective for fiscal years beginning after May 15, 2002. Upon adoption of SFAS
No. 145, the Company reclassifed the losses on extinguishments of debt that were
classified as extraordinary items in the year ended September 30, 2002 since
they did not meet the criteria in Opinion 30 for classification as extraordinary
items.

         In July 2002, the Financial Accounting Standards Board issued SFAS No.
146, Accounting for Exit or Disposal Activities. SFAS No. 146 addresses the
recognition, measurement, and reporting of costs that are associated with exit
and disposal activities, including costs related to terminating a contract that
is not a capital lease and termination benefits that employees who are
involuntarily terminated receive under the terms of a one-time benefit
arrangement that is not an ongoing benefit arrangement or an individual
deferred-compensation contract. SFAS No. 146 supersedes Emerging Issues Task
Force Issue No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring). SFAS No. 146 is effective for exit or disposal activities
of the Company that are initiated after December 31, 2002. No such activities
have occurred since that date.

         In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, Accounting for Stock-Based Compensation - Transition and
Disclosure, an amendment of FASB Statement No. 123 ("SFAS 148"). SFAS 148
provides alternative methods of transition for voluntary change to the fair
value method of accounting for stock-based employee compensation. Such methods
for transition can be voluntarily implemented in a fiscal year ending after
December 15, 2002. In addition, SFAS 148 amends SFAS 123 to require certain
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. The effective date for the disclosure requirement is
interim periods beginning after December 15, 2002. Early adoption is encouraged.
Galen has adopted the disclosure requirement effective October 1, 2002.

         In November 2002, the FASB issued Interpretation No. 45 "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others" ("FIN 45"). FIN 45 elaborates on the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has issued. It
also requires the guarantor to recognize, at the inception of the guarantee, a
liability for the fair value of obligation undertaken in issuing the guarantee.
The disclosure requirements are effective for quarters ending after December 15,
2002 and the liability recognition is in effect for guarantees initiated after
December 31, 2002. The Company adopted FIN 45 effective October 1, 2002, and has
determined that it does not have a material impact on the Company's reported
results of operations, financial positions or cash flows.

         In December 2003, the FASB issued revised Interpretation No. 46,
Consolidation of Variable Interest Entities ("FIN 46"). In general, a variable
interest entity is an entity with a level of invested equity that is not
sufficient to fund

                                       60
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

future activities to permit it to operate on a stand-alone basis, or whose
equity holders lack certain characteristics of a controlling financial interest.
FIN 46 requires a variable interest entity to be consolidated by a company if
that company is subject to a majority of the risk of loss from the variable
interest entity's activities or entitled to receive a majority of the entity's
residual returns or both. The consolidation requirements of FIN 46 apply to
variable interest entities no later than the end of the first reporting period
that ends after March 15, 2004. FIN 46 applies to those entities that are
considered special purpose entities no later than as of the end of the first
reporting period that ends after December 15, 2003. The Company does not have
any variable interest entities or special purpose entities.

         In May 2003, the FASB issued Statement of Financial Accounting
Standards No. 150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity ("SFAS 150"). SFAS 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liability and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). SFAS 150 is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
effective at the beginning of the first interim period beginning after June 15,
2003. The adoption of SFAS 150 has no material impact on the results of
operations and financial position of the Company.

2 ACQUISITIONS

         YEAR ENDED SEPTEMBER 30, 2003

         In January 2003, the Company acquired the U.S. sales and marketing
rights to Sarafem(R) from Eli Lilly and Company ("Lilly") for cash consideration
of approximately $295,000. Sarafem(R) is a treatment for premenstrual dysphoric
disorder ("PMDD"), a severe form of premenstrual syndrome. Galen entered into a
three-year supply agreement with Lilly in relation to this product with no
option to renew. The acquisition of the sales and marketing rights is being
accounted for as a purchase. The entire purchase price was allocated to the
product, and no goodwill was recorded. No value was assigned to the supply
agreement for the acquired product as the product purchase price under the
agreement approximates the price Galen would expect to pay third party contract
manufacturers. The asset value has been increased to $338,000 in order to
account for deferred taxes. The intangible assets are being amortized over 20
years, the estimated useful life of the sales and marketing rights.

         In March 2003, the Company acquired two oral contraceptives,
Estrostep(R) and Loestrin(R), from Pfizer, Inc. ("Pfizer") for an initial cash
consideration of approximately $197,000. Further contingent cash consideration
of up to a maximum of $55,400 will become payable by Galen to Pfizer in the
event that Estrostep(R) retains market exclusivity during the life of its
patent. The products are manufactured at Pfizer's manufacturing facility in
Fajardo, Puerto Rico. Galen's purchase agreement includes a right of first
negotiation for a period of 90 days following an offer by Pfizer to sell the
Fajardo facility within five years of the closing of the transaction. If after
such 90 day period, the parties have not entered into definitive agreements,
Pfizer may sell the Fajardo facility to a third party provided that for a period
of two years thereafter, such sale may not be on terms materially less favorable
to Pfizer than those proposed by the Company. Galen also entered into a
transitional supply agreement with Pfizer in relation to these products, which
will terminate upon the earlier of five years following the date of the
agreement and four years from the expiration of a 90-day exclusive negotiation
period following Pfizer's offer to sell the Fajardo facility to Galen. If Pfizer
completes the sale of the Fajardo facility to Galen prior to this time, the
transitional supply agreement will terminate upon the completion of such sale.
The Company acquired all of the intangible assets associated with the products
including the patents, trademarks, regulatory files, manufacturing know-how and
other intellectual property. The acquisition of the products is being accounted
for as a purchase. The entire purchase price was allocated to the products, and
no goodwill was recorded. The asset value has been increased to $226,000 in
order to account for deferred taxes. The intangible assets are being amortized
over 20 years, the products' estimated useful lives.

         In April 2003 the Company entered into a strategic alliance in
dermatology with Bristol-Myers Squibb ("Bristol-Myers") and LEO Pharma A/S ("Leo
Pharma"). In connection with this alliance, the Company capitalized payments to
Leo Pharma related to the option to purchase the rights to Dovonex(R) of $5,000
in fiscal year 2003 in addition to $2,000 which had been paid in the prior year.

                                       61
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

         In April 2003, the Company acquired the continuous estrogen-progestogen
therapy product, femhrt(R), from Pfizer, Inc. ("Pfizer") for an initial cash
consideration of approximately $162,000. Further contingent cash consideration
of up to a maximum of $69,600 will become payable by Galen to Pfizer in the
event that femhrt(R) retains market exclusivity during the life of its patent.
Duramed Pharmaceutical, Inc. ("Duramed"), a wholly owned subsidiary of Barr
Laboratories, manufactures and packages femhrt(R) under a supply agreement with
Pfizer which has been assigned to Galen. This agreement continues until
September 24, 2007 and provides for two additional one-year renewal terms.
femhrt(R) is also packaged at Pfizer's manufacturing facility in Fajardo, Puerto
Rico. Galen's purchase agreement includes a right of first negotiation for a
period of 90 days following an offer by Pfizer to sell the Fajardo facility
within five years of the closing of the transaction. If after such 90 day
period, the parties have not entered into definitive agreements, Pfizer may sell
the Fajardo facility to a third party provided that for a period of two years
thereafter, such sale may not be on terms materially less favorable to Pfizer
than those proposed by the Company. Galen acquired all of the intangible assets
associated with the product including the patents, trademarks, regulatory files,
manufacturing know-how and other intellectual property. The acquisition of the
product is being accounted for as a purchase. The entire purchase price was
allocated to the product, and no goodwill was recorded. The asset value has been
increased to $185,000 in order to account for deferred taxes. The intangible
assets are being amortized over 20 years, the product's estimated useful life.

         YEAR ENDED SEPTEMBER 30, 2002

         In March 2002, Galen purchased Duricef(R), an antibiotic, and
Moisturel(R), a moisturizing skin cream, from Bristol-Myers Squibb for
approximately $40,440. The asset value has been increased by an additional
$5,700 for deferred taxes. The acquisition of the products is being accounted
for as a purchase. The entire purchase price was allocated to the product, and
no goodwill was recorded. The intangible assets are being amortized over 20
years, the products' estimated useful life.

         YEAR ENDED SEPTEMBER 30, 2001

         In June 2001, Galen purchased Estrace(R) tablets, a branded estrogen
therapy product, from Bristol-Myers Squibb for approximately $95,000. In
connection with the purchase, Galen entered into a five-year supply agreement
with Bristol-Myers Squibb Laboratories Company in relation to this product with
an option to renew for two additional years. Galen acquired rights to all of the
intangible assets associated with the product including the trademark,
regulatory files, manufacturing know-how and other intellectual property. The
acquisition of the product is being accounted for as a purchase. The entire
purchase price was allocated to the product, and no goodwill was recorded. No
value was assigned to the supply agreement for the acquired product as the
product purchase price under the agreement approximates the price Galen would
expect to pay third party contract manufacturers. The asset value has been
increased to $123,000 in order to account for certain liabilities assumed by the
Company at the time of purchase, and for deferred taxes. The intangible assets
are being amortized over 20 years, the product's estimated useful life.

UNAUDITED PRO FORMA INFORMATION

         The following unaudited pro forma information for the years ended
September 30, 2003 and 2002 presents the Company's results of operations
assuming the Company's acquisitions of Estrostep(R), Loestrin(R), femhrt(R), and
Sarafem(R) were completed as of October 1, 2001. These unaudited pro forma
results have been prepared for comparative purposes only and include certain
adjustments, such as additional amortization expense, increased interest expense
on acquisition debt and related adjustments. They do not purport to be
indicative of the results of operations that actually would have resulted had
the transactions occurred as of October 1, 2001, or of future results of
operations of the consolidated entities.

                                       62
<PAGE>


                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                         FOR THE YEARS ENDED
                                                                            SEPTEMBER 30,
                                                                    -----------------------------
                                                                        2003             2002
                                                                    ------------     ------------
<S>                                                                 <C>              <C>
Revenue                                                             $    562,137     $    545,873
                                                                    ------------     ------------
Cost of sales                                                             83,997           79,743
Operating expenses                                                       224,137          218,460
Amortization                                                              58,223           56,947
                                                                    ------------     ------------
       Total operating expenses                                          366,357          355,150
                                                                    ------------     ------------
Operating income                                                         195,780          190,723
                                                                    ------------     ------------
       Net interest expense                                               12,725           27,831
       Provision for income taxes                                         48,446           39,020
                                                                    ------------     ------------
Income from Continuing Operations                                        134,609          123,872
                                                                    ------------     ------------
Discontinued operations, net of tax charge                                     -          108,128
                                                                    ------------     ------------
Net income                                                          $    134,609     $    232,000
                                                                    ------------     ------------
Net income per ADS - Basic                                          $       2.93     $       5.01
                                                                    ============     ============
Net income per ADS - Diluted                                        $       2.92     $       4.98
                                                                    ------------     ------------
Weighted average ADS equivalents outstanding:
     Basic                                                            45,893,514       46,311,241
                                                                    ------------     ------------
     Diluted                                                          46,126,060       46,582,659
                                                                    ------------     ------------
</TABLE>

3 DIVESTITURES

         During the year ended September 30, 2002, the Company disposed of its
Pharmaceutical Services business segment, which consisted of Chemical Synthesis
Services ("CSS"), Clinical Trial Services ("CTS") and Interactive Clinical
Technologies, Inc. ("ICTI"). These businesses provided technology-based research
and development services to the pharmaceutical industry. Companies controlled by
Dr. Allen McClay, the founder, former President, former executive director of
Galen and a significant shareholder, acquired CSS, CTS and ICTI. As part of this
transaction Mr. Alan Armstrong, President of Galen's Pharmaceutical Services
division, resigned from his position as an executive, as well as his Galen
directorship. The Company received net proceeds of approximately $229,000 from
the sales of CSS, CTS and ICTI. The Company used the proceeds from these
transactions in 2003 to pursue selected product acquisitions and strategic
opportunities, and for general corporate purposes. The Company reported a net
pre-tax gain of $104,984 from the disposal of this business segment, which is
included in the Company's Statement of Operations for year ended September 30,
2002. Also included in the Company's results for the year ended September 30,
2002 are related taxes amounting to $3,893.

CHEMICAL SYNTHESIS SERVICES ("CSS")

         CSS consisted of SynGal (a division of Galen) and QuChem Limited (a
Galen subsidiary), and provided integrated services from basic research and
development and small-scale synthesis to kilogram-scale synthesis to customers
requiring custom chemical syntheses. CSS is based in Northern Ireland and had
revenue of $7,500 in the year ended September 30, 2001. In anticipation of the
transaction, Galen purchased the 24% minority interest in QuChem Limited that it
did not already own for consideration of approximately $960.

                                       63
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

CLINICAL TRIAL SERVICES ("CTS")

         CTS consisted of Gaelta Research and Development Limited and Galen,
Inc., both of which were Galen subsidiaries. Based in Northern Ireland, CTS
provided clinical packaging services to pharmaceutical companies that chose to
outsource their manufacturing, packaging and distribution of both active drugs
and placebos to targeted clinical trial patients, and analytical services. CTS
also operated facilities in Audubon, Pennsylvania, and in Durham, North
Carolina, where it offered specialized clinical packaging services to
pharmaceutical companies. CTS had revenue of $58,700 in the year ended September
30, 2001.

INTERACTIVE CLINICAL TECHNOLOGIES, INC. ("ICTI")

         ICTI provided interactive voice response systems for clinical trial
management from its bases in Yardley, Pennsylvania, San Francisco, California,
and Maidenhead in the U.K. ICTI had revenue of $13,521 in the year ended
September 30, 2001.

         Following are the assets and liabilities of the discontinued operations
as of the respective disposal dates:

<TABLE>
<CAPTION>
                                                           CSS               CTS               ICTI
DISPOSAL DATE                                          DECEMBER 31,         MAY 31,          AUGUST 23,
                                                          2001               2002               2002
                                                       -------------------------------------------------
<S>                                                    <C>               <C>               <C>
Fixed assets                                           $      25,685     $      53,068     $       3,056
Goodwill                                                         580            14,276            19,179
Current assets                                                 2,201            23,500             5,273
Current liabilities                                           (2,324)          (17,312)           (6,124)
Deferred income                                               (1,290)           (1,914)           (1,472)
                                                       -------------     -------------     -------------
       Net assets of discontinued operations           $      24,852     $      71,618     $      19,912
                                                       -------------     -------------     -------------
</TABLE>

                                       64
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

4 CASH AND CASH EQUIVALENTS

<TABLE>
<CAPTION>
                                                                                            AS OF SEPTEMBER 30,
                                                                                        ---------------------------
                                                                                           2003            2002
                                                                                        -----------     -----------
<S>                                                                                     <C>             <C>
Cash at bank and in hand                                                                $         -     $         1
Short term deposits                                                                          89,073         313,011
                                                                                        -----------     -----------
Cash and cash equivalents                                                               $    89,073     $   313,012
                                                                                        ===========     ===========
</TABLE>

5 ACCOUNTS RECEIVABLE

<TABLE>
<CAPTION>
                                                                                            AS OF SEPTEMBER 30,
                                                                                        ---------------------------
                                                                                           2003            2002
                                                                                        -----------     -----------
<S>                                                                                     <C>             <C>
Trade receivables                                                                       $    38,753     $    34,530
Less allowance for doubtful accounts                                                            711           1,661
                                                                                        -----------     -----------
Trade receivables, net                                                                  $    38,042     $    32,869
                                                                                        ===========     ===========
</TABLE>

6 INVENTORY

<TABLE>
<CAPTION>
                                                                                            AS OF SEPTEMBER 30,
                                                                                        ---------------------------
                                                                                           2003            2002
                                                                                        -----------     -----------
<S>                                                                                     <C>             <C>
Finished goods                                                                          $    20,600     $    14,457
Raw materials                                                                                12,208          12,445
                                                                                        -----------     -----------
Inventories                                                                             $    32,808     $    26,902
                                                                                        ===========     ===========
</TABLE>

7 PREPAID EXPENSE AND OTHER CURRENT ASSETS

<TABLE>
<CAPTION>
                                                                                            AS OF SEPTEMBER 30,
                                                                                        ---------------------------
                                                                                           2003            2002
                                                                                        -----------     -----------
<S>                                                                                     <C>             <C>
Prepaid expense                                                                         $     6,612     $     3,018
Other current assets                                                                            196           1,379
                                                                                        -----------     -----------
Prepaid expense and other current assets                                                $     6,808     $     4,397
                                                                                        ===========     ===========
</TABLE>

8 PROPERTY, PLANT AND EQUIPMENT, NET

<TABLE>
<CAPTION>
                                                                                            AS OF SEPTEMBER 30,
                                                                                        ---------------------------
                                                                                           2003            2002
                                                                                        -----------     -----------
<S>                                                                                     <C>             <C>
Land and buildings                                                                      $    42,048     $    38,161
Plant and machinery                                                                          43,640          40,872
Fixtures and fittings                                                                        13,192          11,927
Motor vehicles                                                                                  708             584
                                                                                        -----------     -----------
                                                                                             99,588          91,544
Less accumulated depreciation                                                                34,994          28,150
                                                                                        -----------     -----------
Property, plant and equipment, net                                                      $    64,594     $    63,394
                                                                                        ===========     ===========
</TABLE>

                                       65
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

         Depreciation expense of continuing operations for the years ended
September 30, 2003, 2002 and 2001 was $6,844, $5,323, and $4,303, respectively.
Included in the above table are the following amounts in relation to capital
leases:

<TABLE>
<CAPTION>
                                                                                            AS OF SEPTEMBER 30,
                                                                                        ---------------------------
                                                                                           2003            2002
                                                                                        -----------     -----------
<S>                                                                                     <C>             <C>
Plant and machinery                                                                     $     2,656     $     2,939
Less accumulated depreciation                                                                 1,159             947
                                                                                        -----------     -----------
                                                                                        $     1,497     $     1,992
                                                                                        ===========     ===========
</TABLE>

9 INTANGIBLE ASSETS

         Amortizable intangible assets were as follows:

<TABLE>
<CAPTION>
                                                                         PRODUCT                             TOTAL
                                                                        SPECIFIC                           INTANGIBLE
                                                                         ASSETS          TRADEMARKS          ASSETS
                                                                      -------------     -------------     -------------
<S>                                                                   <C>               <C>               <C>
SEPTEMBER 30, 2003:
Net book value                                                        $   1,086,050     $      23,056     $   1,109,106
                                                                      =============     =============     =============
Accumulated amortization                                              $      71,398     $       4,068     $      75,466
                                                                      =============     =============     =============
SEPTEMBER 30, 2002:
Net book value                                                        $     357,319     $      24,412     $     381,731
                                                                      =============     =============     =============
Accumulated amortization                                              $      30,431     $       2,712     $      33,143
                                                                      =============     =============     =============
</TABLE>

         These intangible assets are being amortized on a straight-line basis
over 20 years, their estimated useful lives. Intangible asset amortization
expense for the years ended September 30, 2003 and 2002 amounted to $42,323 and
$19,497 respectively. Following is the estimated aggregate amortization expense
for the Company's next five fiscal years:

<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30,
-------------------------
<S>                             <C>
         2004                   $ 59,500
         2005                   $ 59,500
         2006                   $ 59,500
         2007                   $ 59,500
         2008                   $ 59,500
</TABLE>

         Following are the changes in goodwill:

                                       66
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

<TABLE>
<S>                                                                           <C>
BALANCE AS OF SEPTEMBER 30, 2001                                              $ 253,680

Plus:          Reclassification of assembled workforce                            2,914
               Foreign currency translation adjustment                           22,377
               Pricing on acquisition of minority interests                         580
Less:          Elimination of accrued consideration                              (2,144)
               Deferred tax adjustment on assembled workforce                    (1,164)
               Sale of Services businesses                                      (34,035)
                                                                              ---------
BALANCE AS OF SEPTEMBER 30, 2002                                              $ 242,208

Less:          Reduction of valuation allowance
               for net operating loss carry forwards                            (17,274)
                                                                              ---------
BALANCE AS OF SEPTEMBER 30, 2003                                              $ 224,934
                                                                              =========
</TABLE>

         The following table reconciles reported net income to that which would
have been reported had SFAS 142 been applied as of the beginning of fiscal 2001:

<TABLE>
<CAPTION>
                                                                                   YEAR ENDED SEPTEMBER 30,
                                                                      -------------------------------------------------
                                                                          2003              2002              2001
                                                                      -------------     -------------     -------------
<S>                                                                   <C>               <C>               <C>
Reported net income                                                   $      96,155     $     145,176     $      16,426
Add back:  Goodwill amortization, net of tax                                      -                 -            12,977
                                                                      -------------     -------------     -------------
    Adjusted net income                                               $      96,155     $     145,176     $      29,403
                                                                      =============     =============     =============
BASIC EARNINGS PER ADS:
    Reported net income                                               $        2.10     $        3.13     $        0.41
    Goodwill amortization, net of tax                                             -                 -              0.32
                                                                      -------------     -------------     -------------
        Adjusted net income                                           $        2.10     $        3.13     $        0.73
                                                                      =============     =============     =============
DILUTED EARNINGS PER ADS:
    Reported net income                                               $        2.08     $        3.12     $        0.40
    Goodwill amortization, net of tax                                             -                 -              0.32
                                                                      -------------     -------------     -------------
        Adjusted net income                                           $        2.08     $        3.12     $        0.72
                                                                      =============     =============     =============
</TABLE>

10 ACCRUED AND OTHER LIABILITIES

<TABLE>
<CAPTION>
                                                                                            AS OF SEPTEMBER 30,
                                                                                        ---------------------------
                                                                                           2003            2002
                                                                                        -----------     -----------
<S>                                                                                     <C>             <C>
Accrued transaction costs                                                                         -     $     7,102
Other accrued expenses                                                                       70,848          36,951
                                                                                        -----------     -----------
Accrued and other current liabilities                                                   $    70,848     $    44,053
                                                                                        ===========     ===========
</TABLE>

                                       67
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

11 LONG-TERM DEBT AND CAPITAL LEASES

<TABLE>
<CAPTION>
                                                                              AS OF SEPTEMBER 30,
                                                                          ---------------------------
                                                                             2003              2002
                                                                          ---------          --------
<S>                                                                       <C>                <C>
Long-term debt                                                            $ 342,153          $ 51,345
Less:  current installments                                                 103,088               616
                                                                          ---------          --------
     Long-term debt, excluding current installments                         239,065            50,729
                                                                          ---------          --------
Capital leases                                                                  236               616
Less:  current installments                                                     233               392
                                                                          ---------          --------
     Capital leases, excluding current installments                               3               224
                                                                          ---------          --------
Long-term debt and capital leases, excluding current installments         $ 239,068          $ 50,953
                                                                          =========          ========
</TABLE>

  Long-term debt consists of:

<TABLE>
<CAPTION>
                                                                       AS OF SEPTEMBER 30,
                                                                    ------------------------
                                                                      2003            2002
                                                                    ---------       --------
<S>                                                                 <C>             <C>
Term loans - at variable interest rates                             $ 294,991       $    788
           - at fixed interest rate (8.00%)                               577            783
Warner Chilcott senior notes due 2008 -
     $45,475 principal amount (2002: $48,400), 12.625%                 46,585         49,774
                                                                    ---------       --------
                                                                    $ 342,153       $ 51,345
                                                                    =========       ========
</TABLE>

         The weighted average interest rates at September 30, 2003 were 8.0% and
2.5%, respectively, for fixed and variable-rate term loans (2002: 8.0% and
4.6%). The term loans are subject to circular and cross guarantees and
indemnities.

         Principal payments in each of the next five years and thereafter on
long-term debt and capital leases outstanding at September 30, 2003 amount to:

<TABLE>
<CAPTION>
                               VARIABLE                                                         AS OF
                              RATE BANK      FIXED RATE    FIXED RATE       CAPITAL          SEPTEMBER 30,
                                 DEBT         BANK DEBT       NOTES          LEASES              2003
                              ---------      ----------    ----------       --------         -------------
<S>                           <C>            <C>           <C>              <C>              <C>
2004                          $ 102,813         $ 275        $      -         $ 233          $ 103,321
2005                            102,646           302               -             3            102,951
2006                             60,813             -               -             -             60,813
2007                             19,146             -               -             -             19,146
2008                              9,573             -          46,585             -             56,158
Thereafter                            -             -               -             -                  -
                              ---------         -----        --------         -----          ---------
                              $ 294,991         $ 577        $ 46,585         $ 236          $ 342,389
                              =========         =====        ========         =====          =========
</TABLE>

                                       68

<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

Capital lease obligations for plant and machinery as of September 30, 2003 were
as follows:

<TABLE>
<S>                                                    <C>
2004                                                   $ 235
2005                                                       3
2006                                                       -
2007                                                       -
2008                                                       -
                                                       -----
                                                         238
Less interest element                                      2
                                                       -----
                                                       $ 236
                                                       =====
</TABLE>

WARNER CHILCOTT SENIOR NOTES DUE 2008

         Warner Chilcott, Inc. ("WCI") at the time of its acquisition by Galen
on September 29, 2000 had $200,000 principal amount of 12 5/8% senior notes
outstanding. The senior notes were issued by WCI in February 2000 and are
unconditionally guaranteed by Warner Chilcott, plc ("Warner Chilcott"), WCI's
direct parent. In March 2001, Galen unconditionally guaranteed the notes.

         Interest payments on the notes are due semi-annually in arrears on
February 15 and August 15. The senior notes are due in February 2008 and are
redeemable prior to maturity at the option of WCI, in whole or part, beginning
in February 15, 2004 at redemption prices that decrease annually and range from
106.3125% to 100% of the principal amount of the senior notes plus accrued
interest. The indenture governing the senior notes limits Warner Chilcott and
its subsidiaries' ability to incur or guarantee additional debt, as well as to
pay dividends or distributions on, or redeem or repurchase, capital stock.

         The indenture governing the senior notes provides that upon a change of
control, each note holder has the right to require WCI to repurchase their notes
at a price equal to 101% of the principal amount plus accrued interest. Galen's
acquisition of Warner Chilcott triggered the right of holders to require WCI to
repurchase the senior notes. Approximately 20% of the note holders elected to
tender their notes under this provision and, on December 13, 2000, Warner
Chilcott purchased $40,300 principal amount of the notes. During the two years
ended September 30, 2003 and 2002, Galen and its affiliates purchased a total of
$114,225 of principal amount of the senior notes in privately negotiated
transactions for $131,328 plus accrued interest. On December 18, 2003, WCI gave
notice to the trustee under the indenture of its intention to redeem all of the
outstanding senior notes on February 15, 2004.

         As of September 30, 2003 the notes are shown on Galen's consolidated
balance sheet at $46,585, which reflects the estimated fair market value of the
notes on the date that Galen acquired Warner Chilcott, adjusted for the $40,300
principal amount redemption in December 2000, Galen's purchase of $114,225
principal amount during the two years ended September 30, 2003 and 2002 in
privately negotiated transactions, and accumulated premium amortization.

12 FINANCIAL INSTRUMENTS

         The following methods and assumptions were used to estimate the fair
value of each material class of financial instrument:

         CASH AND CASH EQUIVALENTS -- carrying amount approximates fair value
         due to the short-term nature of these items.

         ACCOUNTS RECEIVABLE -- carrying amount approximates fair value due to
         the short-term nature of these instruments.

         ACCOUNTS AND NOTES PAYABLE -- carrying amount approximates fair value
         due to the short-term nature of these instruments.

                                       69

<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

         LONG TERM DEBT -- the fair value of long-term debt is estimated, based
         on discounted future cash flows using currently available interest
         rates.

         SENIOR NOTES -- the fair value of the Warner Chilcott senior notes is
         based on their redemption price in 2004.

         Set out below is a comparison by category of book values and fair
values of the Company's financial assets and liabilities as of September 30,
2003 and 2002:

<TABLE>
<CAPTION>
 SEPTEMBER 30, 2003                                           BOOK VALUE         FAIR VALUE
---------------------                                         ----------         ----------
<S>                                                           <C>                <C>
Financial assets                                               $  89,073          $  89,073
Short-term borrowings                                          $ 103,321          $ 103,321
Long-term borrowings                                           $ 239,068          $ 240,854
</TABLE>

<TABLE>
<CAPTION>
 SEPTEMBER 30, 2002                                           BOOK VALUE         FAIR VALUE
---------------------                                         ----------         ----------
<S>                                                           <C>                <C>
Financial assets                                               $ 313,012          $ 313,012
Short-term borrowings                                          $   1,008          $   1,008
Long-term borrowings                                           $  50,953          $  58,391
</TABLE>

         The fair values shown above have been assessed by calculating
discounted cash flows that would arise if the commitments at September 30, 2003
and 2002 had been entered into at market rates at that time.

13 SHARE CAPITAL AND RETAINED EARNINGS

         The Company has 250,000,000 ordinary shares, par value 10 pence,
authorized of which 188,209,895 were issued and outstanding as of September 30,
2003. Galen shares trade in the United States in American Depositary Share
("ADS") form with each comprised of four ordinary shares. On an ADS equivalent
basis, the Company would have 62,500,000 equivalent ADSs authorized of which
47,052,473 would have been issued and outstanding as of September 30, 2003.
During the year ended September 30, 2002, 2,050,000 ordinary shares were
repurchased for a total of $12,600. No shares were repurchased in the year ended
September 30, 2003.

         In November 1999, Galen placed 6,000,000 ordinary shares (the
equivalent of 1,500,000 ADSs) and received net proceeds of $56,800. On September
29, 2000 Galen issued 31,698,554 ordinary shares (the equivalent of 7,924,639
ADSs) in exchange for all of the outstanding shares of Warner Chilcott. In July
2001, Galen completed an International Offer in which 26,490,011 ordinary shares
were placed (the equivalent of 6,622,503 ADSs) and received approximately
$268,250, net of fees.

         As part of the Warner Chilcott acquisition, Galen also issued options
and warrants to purchase Galen ordinary shares and ADSs to former holders of
options and warrants to purchase Warner Chilcott shares. In the aggregate, Galen
issued options and warrants over 10,254,040 Galen ordinary shares (the
equivalent of 2,563,510 ADSs). Most of the options and warrants issued in
exchange for Warner Chilcott options and warrants had been issued by Warner
Chilcott to officers, employees and consultants, details of which are contained
in Footnote 14 "Stock Compensation Plans." As of September 30, 2002, all Galen
warrants issued to former Warner Chilcott investors were cancelled either by
exercise or expiry.

         Unrestricted retained earnings available for payment of dividends as
determined under U.K. GAAP at September 30, 2003 were $164,134.

                                       70

<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

14 STOCK COMPENSATION PLANS

SHARE OPTION SCHEMES

         The following share option schemes were established in 1996:

         - The Galen Approved Executive Share Option Scheme

         - The Galen Unapproved Executive Share Option Scheme

         - The Galen Savings Related Share Option Scheme

         The Galen 2000 US Option Scheme was established in 2000. The Galen Inc
Employee Stock Purchase Plan, established in 1998, was terminated upon disposal
of our Clinical Trial Services business in May 2002.

A summary of the main terms of the schemes is set out below.

THE GALEN APPROVED EXECUTIVE SHARE OPTION SCHEME AND THE GALEN UNAPPROVED
EXECUTIVE SHARE SCHEME ("THE EXECUTIVE SCHEMES")

         These are discretionary share schemes, one of which has been approved
by the U.K. Inland Revenue. The terms of these schemes are similar unless
indicated to the contrary. Both schemes provide for options to be granted over
unissued shares or shares held in a trust. Options are granted at the discretion
of the Remuneration Committee of the Company to any full time employee of Galen
or any of its subsidiaries.

         Options may be exercised between the third and tenth anniversaries of
their date of grant. The exercise price is not less than the higher of the
nominal value of the share and the middle market quotation for the last dealing
day before the date of grant.

         The number of options that may be issued is subject to overall scheme
limits and individual limits. No further options may be granted if, as a result:

         (i)      the aggregate number of shares issued, or remaining issuable,
                  pursuant to options granted during the previous 10 years under
                  the Executive Schemes, the SAYE Scheme, the U.S. Share Scheme
                  and all other employees' share schemes established by the
                  Company would exceed 10% of the Company's issued share capital
                  on the day preceding the proposed grant date; or

         (ii)     the aggregate number of shares issued, or remaining issuable,
                  pursuant to options granted during the previous 10 years under
                  the Executive Schemes, the U.S. Share Scheme and all other
                  discretionary share option schemes (other than a savings
                  related share option scheme) established by the Company would
                  exceed 5% of the Company's issued share capital on the day
                  preceding the proposed grant date; or

         (iii)    the aggregate number of shares issued, or remaining issuable,
                  pursuant to options granted during the previous 3 years under
                  the Executive Schemes, the SAYE Scheme, the U.S. Share Scheme
                  and all other employees' share schemes established by the
                  Company would exceed 3% of the Company's issued share capital
                  at that time.

         No further options may be granted to an individual if as a result the
aggregate market value of shares which have been issued to him or for which he
may subscribe under any Company share option scheme (other than the Savings
Related Scheme) pursuant to options granted to him during the previous 10 years
would exceed 4 times his annual earnings, or, in the case of the Approved
Scheme, the aggregate market value of shares which he may acquire under this
scheme would exceed L30,000.

THE GALEN SAVINGS RELATED SHARE OPTION SCHEME ("THE SAYE SCHEME")

                                       71
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
      DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

         The SAYE Scheme permits the grant of options over unissued shares or
shares held in a trust. All eligible employees are invited to apply for options
and it is a condition of application that employees enter into a savings
contract with an approved savings institution. The number of shares over which
an option can be granted will be determined by the level of contributions which
an employee commits to under the savings contract. This scheme is made available
for U.K and Republic of Ireland employees of the Company and its subsidiaries
with more than 1 year continuous employment. The exercise price is not less than
the higher of the nominal value of the share and 80% of the middle market
quotation on the day immediately preceding the date on which the Company issues
invitations to eligible employees to participate in the SAYE Scheme. An option
may be exercised 3 or 5 years after the date of grant depending on the type of
savings contract taken out.

         No further options may be granted if, as a result:

         (i)      the aggregate number of shares issued, or remaining issuable,
                  pursuant to options granted during the previous ten years
                  under the Executive Schemes, the SAYE Scheme, the U.S. Share
                  Scheme and all other employees' share schemes established by
                  the Company would exceed 10% of the Company's issued share
                  capital; or

         (ii)     the aggregate number of shares issued, or remaining issuable,
                  pursuant to options granted in the previous 5 years under the
                  Executive Schemes, the SAYE Scheme, the U.S. Share Scheme and
                  all other employees' share schemes established by the Company
                  would exceed 5% of the Company's issued share capital.

THE GALEN 2000 U.S. OPTION SCHEME ("THE U.S. SHARE SCHEME")

         Pursuant to the terms of the U.S. Share Scheme, both incentive stock
options and non-qualified stock options may be granted to any eligible employee
of or consultant to the Company's U.S. subsidiaries.

         On any date, no option may be granted under the U.S. Share Scheme if,
as a result, any of the following limits would be exceeded:

         (i)      the aggregate number of ordinary shares issued, or remaining
                  issuable, pursuant to options granted during the previous 10
                  years under this scheme, the Executive Schemes, the SAYE
                  Scheme and all other employees' share schemes established by
                  the Company would exceed 10 % of the issued ordinary share
                  capital of the Company on the day preceding that date;

         (ii)     the aggregate number of ordinary shares issued, or remaining
                  issuable, pursuant to options granted during the previous 10
                  years under this scheme, the Executive Schemes and all other
                  discretionary share option schemes (other than a savings
                  related share option scheme) established by the Company would
                  exceed 5% of the issued ordinary share capital of the Company
                  on the day preceding that date;

         (iii)    the aggregate number of ordinary shares issued, or remaining
                  issuable, pursuant to options granted in the previous three
                  years under this scheme, the Executive Schemes, the SAYE
                  Scheme and all other employees' share schemes established by
                  the Company would exceed 3% of the issued ordinary share
                  capital of the Company on the day preceding that date.

         The maximum number of Ordinary Shares that may be granted in ADS form
as incentive stock options under the U.S. Share Scheme is 6,363,332 Ordinary
Shares.

         There are no limits on the maximum number of ADSs which may be the
subject of an option granted under the U.S. Share Scheme to an eligible
employee. The exercise price of an option shall not be less than 100 % of the
fair market value of an ADS on the date the option is granted. The period during
which options may become exercisable shall be set by the Remuneration Committee.
All options shall cease to be exercisable on the earliest of the tenth
anniversary of the date of grant or after a specified period following the
participant's separation from the Company.

                                       72
<PAGE>


                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
      DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

SCHEDULE OF COMPENSATORY SHARE OPTIONS AND WARRANTS (IN TERMS OF EQUIVALENT
ADSs)

<TABLE>
<CAPTION>
                                                                 EXERCISE PRICE PER ADS
                                                               --------------------------
                                             ADSs SUBJECT TO                     WEIGHTED
                                                 OPTION             RANGE        AVERAGE
                                             ---------------   ---------------   --------
<S>                                          <C>               <C>               <C>
BALANCE AT SEPTEMBER 30, 2000                   1,644,137      $ 1.60 - $49.35   $  24.30
     Granted                                      583,923      $38.20 - $48.39   $  45.63
     Exercised                                   (441,497)     $ 9.60 - $49.35   $  16.82
     Cancelled                                    (14,792)     $10.80 - $49.35   $  37.35
                                                ---------      ---------------   --------
BALANCE AT SEPTEMBER 30, 2001                   1,771,771      $ 1.60 - $49.35   $  32.87
     Granted                                      662,859      $27.99 - $45.27   $  43.18
     Exercised                                    (92,494)     $10.80 - $32.00   $  22.80
     Cancelled                                   (237,432)     $11.20 - $51.53   $  43.24
                                                ---------      ---------------   --------
BALANCE AT SEPTEMBER 30, 2002                   2,104,704      $ 1.60 - $51.53   $  34.55
     Granted                                      935,270      $22.89 - $35.00   $  28.80
     Exercised                                   (202,007)     $10.80 - $41.20   $  16.65
     Cancelled                                   (291,201)     $17.02 - $54.68   $  43.79
                                                ---------      ---------------   --------
BALANCE AT SEPTEMBER 30, 2003                   2,546,766      $ 1.60 - $54.68   $  33.18
                                                =========      ===============   ========
EXERCISABLE AT SEPTEMBER 30, 2003               1,295,683      $ 1.60 - $49.35   $  31.97
                                                =========      ===============   ========
</TABLE>

SCHEDULE OF COMPENSATORY SHARE OPTION AND WARRANTS GROUPED BY EXERCISE PRICE
RANGE (IN TERMS OF EQUIVALENT ADSs)

<TABLE>
<CAPTION>
                                                                           RANGE OF EXERCISE PRICE
                                                          ---------------------------------------------------------
                                                            $1.60 TO      $16.00 TO      $30.00 TO      $42.00 TO
                                                             $15.99         $29.99         $41.99         $54.68         TOTAL
                                                          ------------   ------------   ------------   ------------   ------------
<S>                                                       <C>            <C>            <C>            <C>            <C>
Number of ADSs subject to options / warrants                   279,427        856,043        864,238        547,058      2,546,766
Weighted average exercise price                           $      12.93   $      27.94   $      35.45   $      48.28   $      33.18
Weighted average remaining contractual life (years)                3.9            8.0            6.9            6.0            6.7
Number of exercisable options / warrants                       279,427        241,249        476,662        298,345      1,295,683
Weighted average exercise price for exercisable
     options and warrants                                 $      12.93   $      27.33   $      35.65   $      47.70   $      31.97
</TABLE>

         Options issued over ordinary shares have been converted to an
equivalent number of options over ADSs by dividing the number of ordinary shares
subject to such options by four and multiplying the option exercise price by
four. Exercise prices of options denominated in pounds have been converted to a
U.S. dollar equivalent in the above tables using the pound / U.S. dollar
exchange rate as of September 30, 2003.

         The Company applies APB Opinion No. 25 in accounting for option grants
under its share option schemes. Accordingly, the Company recorded compensation
expense related to the performance provisions of certain share options. This
expense amounted to $(1,301), $323 and $4,913 for the fiscal years ending
September 30, 2003, 2002 and 2001, respectively. Had the Company determined
compensation expense based on the fair value of options and warrants issued

                                       73
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
      DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

at the grant date under SFAS No. 123, the Company's net income and net income
per ADS would have differed from the reported amounts as indicated below.

<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED SEPTEMBER 30,
                                                          --------------------------------------------
                                                              2003            2002            2001
                                                          ------------    ------------    ------------
<S>                                                       <C>             <C>             <C>
Net Income as reported                                    $     96,155    $    145,176    $     16,426
Add back: Compensation expense recognized
     during the year, net of tax effect                   $       (671)   $        210    $      3,555
Proforma compensation expense, net of tax effect          $     (4,314)   $     (3,918)   $     (4,135)
                                                          ------------    ------------    ------------
     Proforma net income                                  $     91,170    $    141,468    $     15,846
                                                          ============    ============    ============
PROFORMA NET INCOME PER ADS:
     Basic                                                $       1.99    $       3.06    $       0.39
                                                          ============    ============    ============
     Diluted                                              $       1.98    $       3.04    $       0.39
                                                          ============    ============    ============

WEIGHTED AVERAGE ADS EQUIVALENTS OUTSTANDING:
     Basic                                                  45,893,514      46,311,241      40,338,685
                                                          ============    ============    ============
     Diluted                                                46,126,060      46,582,659      41,040,069
                                                          ============    ============    ============
</TABLE>

         SFAS 123 compensation cost was determined using the Black-Scholes
option-pricing model. Following are the weighted average per share fair values
for options issued during the periods indicated and the related assumptions used
in the calculation of compensation cost under SFAS 123:

<TABLE>
<CAPTION>
                                                                    FOR THE YEARS ENDED SEPTEMBER 30,
                                                          ------------------------------------------------------
                                                              2003                 2002                 2001
                                                          ------------         ------------         ------------
<S>                                                       <C>                  <C>                  <C>
Per share fair value of options                           $ 10.93              $ 15.65              $ 16.76
Option life                                                  4.65 years           4.65 years           4.35 years
Risk free interest rate                                       3.1%                 3.2%                 3.5%
Volatility                                                   40.9%                41.0%                37.0%
Dividend yield                                               0.46%                0.46%                0.25%
</TABLE>

         In accordance with purchase accounting, the fair value of the Warner
Chilcott compensatory options and warrants assumed by the Company was recorded
as part of the purchase consideration paid to acquire Warner Chilcott.
Accordingly, these options and warrants are not considered in the above pro
forma amounts.

15 TREASURY STOCK

         Treasury stock reflects shares held by the Galen Holdings PLC Employee
Benefit Trust (the "Trust"), which was established by the Company's founder, Dr.
McClay, immediately prior to flotation in 1997. This is a discretionary trust
for the benefit of employees and former employees of the Company, including
Directors, and may be used to meet obligations under the Company's share
schemes. Dividends have not been waived by the Trust. Dr. McClay, who cannot be
a beneficiary of the Trust, gifted 5,000,262 ordinary shares (1,250,065 ADS
equivalents) to the Trust on its establishment. Treasury stock is included on
the balance sheet at the value of the shares on the date of the gift, $2.43 per
ordinary share ($9.72 per ADS). At September 30, 2003 there were 4,592,720
(2002: 4,721,241) ordinary shares, or 1,148,180 (2002: 1,180,310), ADS
equivalents, held by the Trust.

                                       74
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
      DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

16 LEASES

         The Company leases land and buildings and motor vehicles under
operating leases. The Company's commitments under the non-cancelable portion of
all operating leases for the next five years as of September 30, 2003 are:

<TABLE>
<S>               <C>
2004              $ 1,227
2005                  730
2006                  969
2007                1,057
2008                  976
                  -------
                  $ 4,959
                  =======
</TABLE>

         Lease and rental expenses included in selling, general and
administrative expenses in the accompanying statements of operations totaled
$1,626, $1,657, and $1,023 for the years ended September 30, 2003, 2002 and
2001, respectively.

17 INCOME TAXES

         Galen Holdings operates in three primary tax jurisdictions, the United
Kingdom, the United States and the Republic of Ireland. The majority of Galen's
taxable income for the periods presented are derived from the United States, the
United Kingdom and the Republic of Ireland. The following table shows the
principal reasons for the difference between the effective tax rate and the U.K.
statutory income tax rate.

<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED SEPTEMBER 30,
                                                          --------------------------------------------
                                                              2003            2002            2001
                                                          ------------    ------------    ------------
<S>                                                       <C>             <C>             <C>
UK statutory income tax rate                                      30.0%           30.0%           30.0%

Income before taxes                                       $    137,815    $     55,702    $     14,596
                                                          ------------    ------------    ------------
Income tax at UK statutory rate                                 41,345          16,711           4,379
Non-deductible expense:
  Amortization of UK goodwill                                        -               -             934
  Non-cash compensation expense                                    149              97           1,473
  Legal, entertainment and other                                 4,543             378             211
Effect of foreign tax rates (net)                               (3,265)          1,997               -
Non-taxable UK grant income                                       (341)           (473)           (459)
Other differences (net)                                           (771)            (56)           (527)
                                                          ------------    ------------    ------------
Provision for income taxes                                $     41,660    $     18,654    $      6,011
                                                          ------------    ------------    ------------
Effective income tax rate                                         30.2%           33.5%           41.2%
                                                          ============    ============    ============
</TABLE>

         The U.K., the Republic of Ireland and U.S. components of income before
taxes and the provisions for income taxes are presented in the table below:

                                       75
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
      DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                              FOR THE YEARS ENDED SEPTEMBER 30,
                                                          ------------------------------------------
                                                              2003           2002           2001
                                                          ------------   ------------   ------------
<S>                                                       <C>            <C>            <C>
INCOME (LOSS) BEFORE TAXES:
United Kingdom                                            $      9,130   $      7,962   $     (3,023)
Republic of Ireland                                             65,391         17,903          8,100
United States                                                   63,294         29,837          9,519
                                                          ------------   ------------   ------------
Total                                                     $    137,815   $     55,702   $     14,596
                                                          ============   ============   ============
PROVISION FOR CURRENT INCOME TAXES:
United Kingdom                                            $      2,754   $      4,755   $        (90)
Republic of Ireland                                             21,941          3,459            584
United States federal tax                                        5,866             74              -
United States state and local taxes                                195             42              -
                                                          ------------   ------------   ------------
Total                                                     $     30,756   $      8,330   $        494
                                                          ------------   ------------   ------------
PROVISION FOR DEFERRED INCOME TAXES:
United Kingdom                                            $      2,472   $      3,203   $     (1,635)
Republic of Ireland                                            (10,632)          (985)             -
United States federal tax                                       15,468          6,986          5,706
United States state and local taxes                              3,596          1,120          1,446
                                                          ------------   ------------   ------------
Total                                                     $     10,904   $     10,324   $      5,517
                                                          ------------   ------------   ------------
Total provision for income taxes                          $     41,660   $     18,654   $      6,011
                                                          ------------   ------------   ------------
</TABLE>

         Deferred income tax liabilities are taxes the Company expects to pay in
future periods. Similarly, deferred tax assets are recorded to reflect expected
reductions in taxes payable in future periods. Deferred income tax items arise
because of differences in the book and tax treatment of certain assets and
liabilities.

         The items giving rise to deferred tax liabilities and assets are
summarized in the following table:

<TABLE>
<CAPTION>
                                                             AS OF SEPTEMBER 30,
                                                           -----------------------
                                                              2003         2002
                                                           ----------   ----------
<S>                                                        <C>          <C>
DEFERRED TAX LIABILITIES:
Property, plant and equipment allowances                   $    6,849   $    6,159
Intangibles and other (net)                                   105,189       29,803
                                                           ----------   ----------
Net deferred tax liability                                 $  112,038   $   35,962
                                                           ==========   ==========
DEFERRED TAX ASSETS:
US federal income tax net operating loss carryforwards     $        -   $   23,635
Valuation allowance for net operating loss carryforwards            -      (17,274)
                                                           ----------   ----------
                                                                             6,361
Share compensation expense                                          -        1,357
                                                           ----------   ----------
Net deferred tax asset                                     $        -   $    7,718
                                                           ==========   ==========
</TABLE>

         In connection with the acquisition of Warner Chilcott, completed on
September 29, 2000, the Company acquired U.S. federal income tax net operating
loss carryforwards of approximately $62,000. At September 30, 2003 all loss
carryforwards had been utilized.

         The deferred tax asset amount relating to share compensation expense
was based on the intrinsic value of share options, the terms of which were
modified on the cessation of employment of an executive. These options have now
been exercised.

                                       76
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
      DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

18 CONCENTRATION OF CREDIT RISK AND RELIANCE ON MAJOR PRODUCTS

         The Company distributes its pharmaceutical products through
wholesalers, distributors and direct to certain retailers. The following table
shows significant customer sales as a percentage of revenue from continuing
operations. Amounts receivable from Customer A as of September 30, 2003 and 2002
totaled $7,122 and $4,363, respectively. As of September 30, 2003 and 2002,
amounts receivable from Customer B totaled $3,077 and $2,932, respectively.

<TABLE>
<CAPTION>
                                                             FOR THE YEARS ENDED SEPTEMBER 30,
                                                           ------------------------------------
                                                           2003            2002            2001
                                                           ----            ----            ----
<S>                                                        <C>             <C>             <C>
Customer A                                                  17%             14%            13%
Customer B                                                  27%             12%             -
</TABLE>

         Net sales of the following pharmaceutical products accounted for more
than 10% of revenue from continuing operations:

<TABLE>
<CAPTION>
                                                             FOR THE YEARS ENDED SEPTEMBER 30,
                                                           ------------------------------------
                                                           2003            2002            2001
                                                           ----            ----            ----
<S>                                                        <C>             <C>             <C>
Sarafem(R) (1)                                              14%              -               -
Ovcon(R) 35 and 50                                          14%             19%             20%
Doryx(R)                                                    13%             18%             11%
Estrace(R) cream                                            10%             16%             16%
</TABLE>

------------

(1)      Acquired by Galen during fiscal 2003. Accordingly, only a partial year
         of revenue for this product is included in the Company's consolidated
         results for the year ended September 30, 2003, and no corresponding
         revenue was included in the Company's results for the year ended
         September 30, 2002 and 2001.

19 CONSOLIDATING SCHEDULE

         Following are consolidating schedules reflecting Balance Sheet and
Statement of Operations data for the Company as of September 30, 2003, and for
the years ended September 30, 2003, 2002 and 2001:

<TABLE>
<CAPTION>
                                                           GALEN            WARNER           WARNER
                                                        HOLDINGS PLC    CHILCOTT, PLC    CHILCOTT, INC.
                                                       --------------   --------------   --------------
<S>                                                    <C>              <C>              <C>
SEPTEMBER 30, 2003
BALANCE SHEET DATA:

ASSETS
    Cash and cash equivalents                          $       30,395   $            -   $       63,235
    Accounts receivable, net                                        -                -           31,172
    Inventories                                                     -                -           72,578
    Inter-company receivable (payable)                        433,290          (20,713)          20,574
    Other assets                                                  747                -            5,047
                                                       --------------   --------------   --------------
       Current assets                                  $      464,432   $      (20,713)  $      192,606
                                                       --------------   --------------   --------------
    Property, plant and equipment, net                 $            -   $            -   $        2,866
    Intangible assets (net) & goodwill                 $            -   $            -   $      349,386
    Investment in Warner Chilcott notes                $       51,590   $            -   $            -
    Investment in subsidiaries                         $      402,733   $      185,593   $            -

LIABILITIES AND EQUITY
    Current liabilities                                $       12,526   $            -   $       48,481
    Long-term liabilities                              $            -   $            -   $      163,641
    Deferred income taxes                              $            -   $            -   $        3,766
    Other non-current liabilities                      $            -   $            -   $            -
    Shareholders' equity                               $      906,229   $      164,880   $      328,970
                                                       ==============   ==============   ==============
YEAR ENDED SEPTEMBER 30, 2003
STATEMENT OF OPERATIONS DATA:

PRODUCT REVENUE                                        $            -   $            -          358,730

OPERATING EXPENSES
    Cost of goods sold (excluding depreciation shown
       separately below)                                            -                -          204,573
    Selling, general and administrative                        18,992                -           71,310
    Research and development                                        -                -            1,612
    Depreciation                                                    -                -              733
    Amortization                                                    -                -           10,569
                                                       --------------   --------------   --------------
       Total operating expenses                                18,992                -          288,797
                                                       --------------   --------------   --------------
OTHER INCOME (EXPENSE)                                         13,561                -          (20,157)
PROVISION FOR INCOME TAXES                                      1,186                -           19,787
                                                       --------------   --------------   --------------
    NET INCOME (LOSS)                                  $       (6,617)  $            -   $       29,989
                                                       ==============   ==============   ==============
YEAR ENDED SEPTEMBER 30, 2002
STATEMENT OF OPERATIONS DATA:

PRODUCT REVENUE                                        $            -   $            -   $      184,991

OPERATING EXPENSES
    Cost of goods sold (excluding depreciation shown                                                  -
       separately below)                                            -                -           56,773
    Selling, general and administrative                        (4,772)              78           53,894
    Research and development                                        -                -            1,755
    Depreciation                                                    -                -              695
    Amortization                                                    -                -           10,731
                                                       --------------   --------------   --------------
       Total operating expenses                                (4,772)              78          123,848
                                                       --------------   --------------   --------------
OTHER INCOME (EXPENSE)                                         11,981                -           (7,262)
PROVISION FOR INCOME TAXES                                      4,766                -           18,557
DISCONTINUED OPERATIONS                                             -                -                -
GAIN ON DISPOSAL                                              100,028                -                -
                                                       --------------   --------------   --------------
    NET INCOME (LOSS)                                  $      112,015   $          (78)  $       35,324
                                                       ==============   ==============   ==============
YEAR ENDED SEPTEMBER 30, 2001
STATEMENT OF OPERATIONS DATA:

PRODUCT REVENUE                                        $            -   $            -   $      114,268

OPERATING EXPENSES
    Cost of goods sold (excluding depreciation shown
       separately below)                                            -                -           21,984
    Selling, general and administrative                           967               (3)          40,898
    Research and development                                        -                -              685
    Depreciation                                                    -                -              414
    Amortization                                                    -                -           22,287
                                                       --------------   --------------   --------------
       Total operating expenses                                   967               (3)          86,268
                                                       --------------   --------------   --------------
OTHER INCOME (EXPENSE)                                            954                -          (20,039)
PROVISION FOR INCOME TAXES                                          -                -            7,153
DISCONTINUED OPERATIONS                                             -                -                -
                                                       --------------   --------------   --------------
    NET INCOME (LOSS)                                  $          (13)  $            3   $          808
                                                       ==============   ==============   ==============

<CAPTION>
                                                           OTHER
                                                         SUBSIDIARY      ELIMINATION
                                                          COMPANIES        ENTRIES        CONSOLIDATED
                                                       --------------   --------------   --------------
<S>                                                    <C>              <C>              <C>
SEPTEMBER 30, 2003
BALANCE SHEET DATA:

ASSETS
    Cash and cash equivalents                          $       (4,557)             $ -   $       89,073
    Accounts receivable, net                                    6,870                -           38,042
    Inventories                                                18,946          (58,716)          32,808
    Inter-company receivable (payable)                       (433,151)               -                -
    Other assets                                                2,861           (1,847)           6,808
                                                       --------------   --------------   --------------
       Current assets                                  $     (409,031)  $      (60,563)  $      166,731
                                                       --------------   --------------   --------------
    Property, plant and equipment, net                 $       61,728   $            -   $       64,594
    Intangible assets (net) & goodwill                 $      984,654   $            -   $    1,334,040
    Investment in Warner Chilcott notes                $       76,378   $     (127,968)  $            -
    Investment in subsidiaries                         $            -   $     (588,326)  $            -

LIABILITIES AND EQUITY
    Current liabilities                                $      152,004   $       (1,808)  $      211,203
    Long-term liabilities                              $      192,483   $     (117,056)  $      239,068
    Deferred income taxes                              $      108,272   $            -   $      112,038
    Other non-current liabilities                      $        5,931   $            -   $        5,931
    Shareholders' equity                               $      255,039   $     (657,993)  $      997,125
                                                       ==============   ==============   ==============
YEAR ENDED SEPTEMBER 30, 2003
STATEMENT OF OPERATIONS DATA:

PRODUCT REVENUE                                        $      314,535   $     (241,003)  $      432,262

OPERATING EXPENSES
    Cost of goods sold (excluding depreciation shown
       separately below)                                      109,086         (241,003)          72,656
    Selling, general and administrative                        45,573                -          135,875
    Research and development                                   27,073                -           28,685
    Depreciation                                                6,111                -            6,844
    Amortization                                               31,754                -           42,323
                                                       --------------   --------------   --------------
       Total operating expenses                               219,597         (241,003)         286,383
                                                       --------------   --------------   --------------
OTHER INCOME (EXPENSE)                                         (3,213)           1,745           (8,064)
PROVISION FOR INCOME TAXES                                     18,820            1,867           41,660
                                                       --------------   --------------   --------------
    NET INCOME (LOSS)                                  $       72,905   $         (122)  $       96,155
                                                       ==============   ==============   ==============
YEAR ENDED SEPTEMBER 30, 2002
STATEMENT OF OPERATIONS DATA:

PRODUCT REVENUE                                        $       50,230                -   $      235,221

OPERATING EXPENSES
    Cost of goods sold (excluding depreciation shown
       separately below)                                       (5,223)               -           51,550
    Selling, general and administrative                        15,330                -           64,530
    Research and development                                   18,028                -           19,783
    Depreciation                                                4,628                -            5,323
    Amortization                                                8,766                -           19,497
                                                       --------------   --------------   --------------
       Total operating expenses                                41,529                -          160,683
                                                       --------------   --------------   --------------
OTHER INCOME (EXPENSE)                                          2,292          (25,847)         (18,836)
PROVISION FOR INCOME TAXES                                        591           (5,260)          18,654
DISCONTINUED OPERATIONS                                         7,037                -            7,037
GAIN ON DISPOSAL                                                1,063                           101,091
                                                       --------------   --------------   --------------
    NET INCOME (LOSS)                                  $       18,502   $      (20,587)  $      145,176
                                                       ==============   ==============   ==============
YEAR ENDED SEPTEMBER 30, 2001
STATEMENT OF OPERATIONS DATA:

PRODUCT REVENUE                                        $       69,554                -   $      183,822

OPERATING EXPENSES
    Cost of goods sold (excluding depreciation shown
       separately below)                                       22,259                -           44,243
    Selling, general and administrative                        22,898                -           64,760
    Research and development                                   13,009                -           13,694
    Depreciation                                                3,889                -            4,303
    Amortization                                                3,898                -           26,185
                                                       --------------   --------------   --------------
       Total operating expenses                                65,953                -          153,185
                                                       --------------   --------------   --------------
OTHER INCOME (EXPENSE)                                          3,044                -          (16,041)
PROVISION FOR INCOME TAXES                                     (1,142)               -            6,011
DISCONTINUED OPERATIONS                                         7,841                -            7,841
                                                       --------------   --------------   --------------
    NET INCOME (LOSS)                                  $       15,628   $            -   $       16,426
                                                       ==============   ==============   ==============
</TABLE>

20 SEGMENT INFORMATION

                                       77
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
      DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

         The Company's business consists of one operating segment for internal
financial reporting purposes. Following is selected information in relation to
continuing operations for the periods indicated:

     a.  REVENUE BY COUNTRY OF ORIGIN

<TABLE>
<CAPTION>
                                              FOR THE YEARS ENDED SEPTEMBER 30,
                                          ------------------------------------------
                                            2003             2002            2001
                                          ---------        ---------       ---------
<S>                                       <C>              <C>             <C>
REVENUES
United States                             $ 359,228        $ 174,531       $ 116,753
United Kingdom                               64,893           58,993          63,349
All other                                     8,141            1,697           3,720
                                          ---------        ---------       ---------
                                          $ 432,262        $ 235,221       $ 183,822
                                          =========        =========       =========
</TABLE>

     b.  PRODUCT REVENUE

<TABLE>
<CAPTION>
                                             FOR THE YEARS ENDED SEPTEMBER 30,
                                              2003         2002         2001
<S>                                        <C>          <C>          <C>
Doryx(R)                                   $   54,134   $   42,439   $   20,402
Duricef(R) and Moisturel(R)                    23,035        8,531            -
Estrace(R) cream                               44,796       36,484       28,508
Estrace(R) tablets                             22,507       20,383        4,252
Estrostep(R)                                   26,494            -            -
femhrt(R)                                      22,577            -            -
Femring(R)                                      2,294            -            -
Loestrin(R)                                    34,887            -            -
Ovcon(R)                                       58,573       45,257       36,935
Sarafem(R)                                     59,907            -            -
Other:
  Other U.S.                                    8,458       23,134       30,376
  U.K. and international                       74,600       58,993       63,349
                                           ----------   ----------   ----------
                                           $  432,262   $  235,221   $  183,822
                                           ==========   ==========   ==========
</TABLE>

21 PENSION AND 401(K) SAVINGS PLAN CONTRIBUTIONS

         Contributions by the Company to defined contribution pension plans
during the years ended September 30, 2003, 2002 and 2001 were $362, $1,055, and
$513, respectively.

         The Company also makes matching contributions to a 401(k) savings plan.
This plan provides eligible employees with the option to defer amounts not in
excess of 15% of his or her compensation. The Company makes matching
contributions to the plan on behalf of all participants who make elective
deferrals. As of January 1, 2003, the Company contributes and allocates to each
participant's account matching contributions equal to 75% of up to 6% of the
participant's contributions. Prior to January 1, 2003, the Company's matching
contribution was 50% of up to 6% of the participant's contributions. The
Company's contributions vest at 25% per year up to 100% at the participant's
completion of four years of employment. The Company's contributions for the
years ended September 30, 2003, 2002, and 2001 amounted to $846, $529, and $436,
respectively.

                                       78
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
      DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

22 NET INCOME PER ORDINARY SHARE AND ADS

         Basic net income per ordinary share and ADS is based on the income
available to ordinary shareholders divided by the weighted average number of
ordinary shares and equivalent ADSs outstanding during the period. Diluted
income per share is computed by adjusting the weighted average number of
ordinary shares and equivalent ADSs outstanding during the period for
potentially dilutive rights to acquire ordinary shares or ADSs that were
outstanding during the period. The dilution attributable to rights to acquire
shares is computed using the treasury stock method and depends upon the market
price of the Company's shares during the period.

         The following table sets forth the computation for basic and diluted
net income per ordinary share and ADS:

<TABLE>
<CAPTION>
                                                              FOR THE YEARS ENDED SEPTEMBER 30,
                                                          ------------------------------------------
                                                              2003           2002           2001
                                                          ------------   ------------   ------------
<S>                                                       <C>            <C>            <C>
Numerator for basic and diluted net income
     per ordinary share and ADS                           $     96,155   $    145,176   $     16,426
                                                          ============   ============   ============
Weighted average number of ordinary shares (basic)         183,574,057    185,244,963    161,354,740
Effect of dilutive stock options                               930,183      1,085,671      2,805,536
                                                          ------------   ------------   ------------
Weighted average number of ordinary shares (diluted)       184,504,240    186,330,634    164,160,276
                                                          ============   ============   ============
Basic and diluted net income per ordinary share           $       0.52   $       0.78   $       0.10
                                                          ============   ============   ============

Weighted average number of equivalent ADSs (basic)          45,893,514     46,311,241     40,338,685
Effect of dilutive stock options                               232,546        271,418        701,384
                                                          ------------   ------------   ------------
Weighted average number of equivalent ADSs (diluted)        46,126,060     46,582,659     41,040,069
                                                          ============   ============   ============
Basic net income per ADS                                  $       2.10   $       3.13   $       0.41
                                                          ============   ============   ============
Diluted net income per ADS                                $       2.08   $       3.12   $       0.40
                                                          ============   ============   ============
</TABLE>

                                       79
<PAGE>

                               GALEN HOLDINGS PLC
          NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONCLUDED)
       DOLLARS IN THOUSANDS UNLESS OTHERWISE NOTED (EXCEPT PER SHARE DATA)

23 RELATED PARTIES

         As of December 2001, the Company sold its CSS business to Dr. Allen
McClay, the founder, former President, former executive director of Galen and a
significant shareholder. As part of the transaction, Alan Armstrong, President
of Galen's Pharmaceutical Services division, resigned from both his position as
an executive and as an executive director of Galen. In May 2002, the Company
sold its CTS business to companies controlled by Dr. McClay. In August 2002, the
Company sold its ICTI business to a company controlled by Dr. McClay. The
Company received a total of $235,000 in consideration for the sale of these
businesses.

         As of September 30, 2003, Elan Corporation plc ("Elan") and its
subsidiaries held 3.8% of Galen's share capital. Mr. Thomas G. Lynch, then
Executive Vice Chairman of the Board of Directors of Elan, served on Galen's
Board as a non-executive director during the period of November 27, 2000 through
February 13, 2002. In March 1999, Warner Chilcott reached a binding agreement
with Elan under which Elan agreed to acquire Warner Chilcott's marketing rights
to an extended-release nifedipine product. Royalty payments received from Elan
during the years ended September 30, 2002 and 2001 amounted to $1,664 and
$2,486, respectively. The agreement was terminated in September 2002 by mutual
agreement. Under the terms of the termination, Elan agreed to pay $1,500 to
Warner Chilcott.

         Boron-LePore Group, Inc. has provided a range of services to Warner
Chilcott including providing contract sales personnel, recruitment of sales
representatives and certain sample data record keeping. Mr. Roger M.
Boissonneault, Galen's Chief Executive Officer, served on the Board of
Boron-LePore until June 24, 2002. During the years ended September 30, 2002 and
2001, Boron-Lepore provided meeting and planning services to Warner Chilcott for
fees of $1,916 and $591, respectively.

24 SUBSEQUENT EVENT

         In December 2003, the Company sold its Pharmaceutical Development and
Manufacturing Services business ("PDMS"), which formed part of Galen's contract
manufacturing business, to a company controlled by Dr. Allen McClay, the
founder, former President and Director of Galen. As part of the agreement, the
acquiring company entered into a supply agreement with Galen to manufacture,
supply and distribute a number of Galen products for the U.K. and Irish markets.
Galen received a cash consideration of $34 million ((pound)20 million) for the
sale of this business.

                                       80
<PAGE>

                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS
                         (IN THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
                                                                           WRITE-
                                            BALANCE AT                      OFFS          FOREIGN        BALANCE
                                           BEGINNING OF    ADDITIONAL      AGAINST        CURRENCY      AT END OF
                                              PERIOD        RESERVES       RESERVES      ADJUSTMENT       PERIOD
                                           ------------   ------------   -----------    -----------    ------------
<S>                                        <C>            <C>            <C>            <C>            <C>
2003:
Allowance for doubtful accounts            $      1,661   $       (950)  $        -     $        -     $        711

2002:
Allowance for doubtful accounts            $      1,134   $        417   $        -     $      110     $      1,661

2001:
Allowance for doubtful accounts            $        294   $        838   $        -     $        2     $      1,134
</TABLE>

                                       81
<PAGE>

ITEM 19. EXHIBITS.

1.1      Articles of Association of Galen (the "Company") as amended on February
         19, 2002 (incorporated by reference to Exhibit 1.1 to the Company's
         Annual Report on Form 20-F filed on January 2, 2003 for the year ended
         September 30, 2002 (File No. 333-12634)).

1.2      Memorandum of Association of the Company (incorporated by reference to
         Exhibit 1.2 to the Company's Annual Report on Form 20-F filed on
         January 25, 2001 for the year ended September 30, 2000 (File No.
         333-12634)).

2.1      Amended and Restated Deposit Agreement dated as of September 29, 2000,
         by and among the Company, Warner Chilcott plc, the Bank of New York and
         the Owners and Holders of American Depositary Receipts (incorporated by
         reference to Exhibit 2.1 to the Company's Annual Report on Form 20-F
         filed on January 25, 2001 for the year ended September 30, 2000 (File
         No. 333-12634)).

2.2      Form of Ordinary Share Certificate (incorporated by reference to
         Exhibit 2.2 to the Company's Annual Report on Form 20-F filed on
         January 25, 2001 for the year ended September 30, 2000 (File No.
         333-12634)).

2.3      Form of ADS Certificate (included within Exhibit 2.1).

2.4      Indenture dated as of February 15, 2000, by and among Warner Chilcott
         plc, Warner Chilcott, Inc. and the Bank of New York (incorporated by
         reference to Exhibit 10.48 to Warner Chilcott plc's Annual Report on
         Form 10-K filed on March 16, 200 for the year ended December 31, 1999
         (File No. 000-29364)).

2.5      First Supplemental Indenture dated as of March 30, 2001, by and among
         the Company, Warner Chilcott, Inc., Warner Chilcott plc and the Bank of
         New York (incorporated by reference to Exhibit 99.1 to the Company's
         Report on Form 6-K filed on April 19, 2001 (File No. 333-12634)).

2.6      Form of Purchase Agreement by and among certain Selling Shareholders
         and Merrill Lynch International (incorporated by reference to Exhibit
         1.1 to the Company's Registration Statement on Form F-1 filed on July
         2, 2001 (File No. 333-64324)).

2.7      Form of Sponsor's and Open Offer Agreement (incorporated by reference
         to Exhibit 1.2 to the Company's Registration Statement on Form F-1
         filed on July 2, 2001 (File No. 333-64324)).

2.8      Form of Conditional Offer to Purchase (incorporated by reference to
         Exhibit 99.1 to the Company's Registration Statement on Form F-1 filed
         on July 2, 2001 (File No. 333-64324)).

4.1      Employment Agreement dated as of May 4, 2000, by and between Warner
         Chilcott, Inc. and Roger M. Boissonneault (incorporated by reference to
         Exhibit 4.1 to the Company's Annual Report on Form 20-F filed on
         January 25, 2001 for the year ended September 30, 2000 (File No.
         333-64324)).

4.2      Amendment dated as of May 20, 2002 to Employment Agreement, by and
         between Warner Chilcott, Inc. and Roger M. Boissonneault (incorporated
         by reference to Exhibit 4.2 to the Company's Annual Report on Form 20-F
         filed on January 2, 2003 for the year ended September 30, 2002 (File
         No. 333-12634)).

4.3      Executive Service Agreement dated as of July 2, 1997 by and between
         Galen Holdings Limited (Renamed Galen Holdings PLC) and Robert Geoffrey
         Elliott (incorporated by reference to Exhibit 4.3 to the Company's
         Annual Report on Form 20-F filed on December 28, 2001 for the year
         ended September 30, 2001 (File No. 333-12634)).

4.4      Executive Service Agreement dated as of April 4, 2001 by and between
         Warner Chilcott (Bermuda) Limited and John Alexander King (incorporated
         by reference to Exhibit 4.5 to the Company's Annual Report on Form 20-F
         filed on December 28, 2001 for the year ended September 30, 2001 (File
         No. 333-64324)).

                                       82
<PAGE>

4.5      Executive Service Agreement dated as of April 10, 2001 by and between
         Galen Holdings PLC and John Alexander King (incorporated by reference
         to Exhibit 4.6 to the Company's Annual Report on Form 20-F filed on
         December 28, 2001 for the year ended September 30, 2001 (File No.
         333-12634)).

4.6      Form of Letter of Appointment to the Board of Directors (incorporated
         by reference to Exhibit 4.7 to the Company's Annual Report on Form 20-F
         filed on December 28, 2001 for the year ended September 30, 2001 (File
         No. 333-12634)).

4.7      Option Rollover and Lock-Up Agreement dated as of May 4, 2000, by and
         between the Company and Roger M. Boissonneault (incorporated by
         reference to Exhibit 4.3 to the Company's Annual Report on Form 20-F
         for the year ended September 30, 2000 (File No. 333-12634)).

4.8      Transaction Agreement dated as of May 4, 2000, by and between the
         Company and Warner Chilcott plc (incorporated by reference to Exhibit
         2.1 to Warner Chilcott plc's Report on Form 8-K filed on May 15, 2000
         (File No. 000-29364)).

4.9      Supplemental Agreement No. 1 to Warner Chilcott plc Warrant Certificate
         as issued to Roger Boissonneault regarding certificate numbered Series
         C No. W03 (incorporated by reference to Exhibit 4.8 to the Company's
         Annual Report on Form 20-F filed on January 25, 2001 for the year ended
         September 30, 2000 (File No. 333-12634)).

4.10     Supplemental Agreement No. 1 to Warner Chilcott plc Warrant Certificate
         as issued to Roger Boissonneault regarding certificate numbered Series
         C No. W04 (incorporated by reference to Exhibit 4.9 to the Company's
         Annual Report on Form 20-F filed on January 25, 2001 for the year ended
         September 30, 2000 (File No. 333-12634)).

4.11     Form of the 2000 US Option Scheme of the Company adopted on September
         29, 2000 and amended on February 19, 2002 (incorporated by reference to
         Exhibit 4.11 to the Company's Annual Report on Form 20-F filed on
         January 2, 2003 for the year ended September 30, 2002 (File No.
         333-12634)).

4.12     Approved Executive Share Option Scheme and Unapproved Executive Share
         Option Scheme of the Company adopted on October 9, 1996 and amended on
         February 19, 2002 (incorporated by reference to Exhibit 4.12 to the
         Company's Annual Report on Form 20-F filed on January 2, 2003 for the
         year ended September 30, 2002 (File No. 333-12634)).

4.13     Purchase Agreement dated as of February 11, 2000, by and among Warner
         Chilcott, Inc., Warner Chilcott plc and Credit Suisse First Boston
         (incorporated by reference to Exhibit 10.49 to Warner Chilcott plc's
         Annual Report on Form 10-K filed on March 16, 2000 for the year ended
         December 31, 1999 (File No. 000-29364)).

4.14     Incentive Share Option Scheme of Warner Chilcott plc, originally
         adopted on April 3, 1997, amended on June 3, 1999 (incorporated by
         reference to Exhibit 10.2 to Warner Chilcott plc's Quarterly Report on
         Form 10-Q filed on August 13, 1999 for the quarter ended June 30, 1999
         (File No. 000-29364)).

4.15     Asset Purchase Agreement dated as of January 26, 2000, by and between
         Warner Chilcott, Inc. and Bristol-Myers Squibb (incorporated by
         reference to Exhibit 10.1 to Warner Chilcott plc's Report on Form 8-K
         filed on February 29, 2000 (File No. 000-29364)).

4.16     Estrace Transitional Support and Supply Agreement dated as of January
         26, 2000, by and between Westwood-Squibb Pharmaceuticals, Inc. and
         Warner Chilcott, Inc. (incorporated by reference to Exhibit 10.2 to
         Warner Chilcott plc's Report on Form 8-K filed on February 29, 2000
         (File No. 000-29364)).

4.17     Ovcon Transitional Support and Supply Agreement by and between
         Bristol-Myers Squibb Laboratories Company and Warner Chilcott, Inc.
         dated as of January 26, 2000 (incorporated by reference to Exhibit 10.3
         to Warner Chilcott plc's Report on Form 8-K filed on February 29, 2000
         (File No. 000-29364)).

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<PAGE>

4.18     License and Distribution Agreement dated as of December 31, 1997, by
         and between Warner Chilcott plc and FH Faulding & Co Ltd (incorporated
         by reference to Exhibit 10.20 to Warner Chilcott plc's Report on Form
         10-K filed on March 30, 1999 for the year ended December 31, 1998 (File
         No. 000-29364)).

4.19     Registration Rights Agreement dated as of February 11, 2000, by and
         among Warner Chilcott, Inc., Credit Suisse First Boston Corporation,
         CIBC World Market Corp. and SG Cowen Securities Corporation
         (incorporated by reference to Exhibit 10.50 to Warner Chilcott plc's
         Annual Report on Form 10-K filed on March 16, 2000 for the year ended
         December 31, 1999 (File No. 000-29364)).

4.20     First Amendment to Loan and Security Agreement dated as of February 28,
         2000, by and between Warner Chilcott, Inc. and PNC Bank National
         Association (incorporated by reference to Exhibit 10.51 to Warner
         Chilcott plc's Annual Report on Form 10-K filed on March 16, 2000 for
         the year ended December 31, 1999 (File No. 000-29364)).

4.21     Asset Purchase Agreement dated as of June 29, 2001 by and between
         Bristol-Myers Squibb Company and Galen (Chemicals) Limited
         (incorporated by reference to Exhibit 10.8 to the Company's Form F-1
         filed on July 2, 2001 (File No. 333-64324)).

4.22     Supply Agreement dated as of June 29, 2001 by and between Bristol-Myers
         Squibb Laboratories Company and Galen (Chemicals) Limited (incorporated
         by reference to Exhibit 10.9 to the Company's Form F-1 filed on July 2,
         2001 (File No. 333-64324)).

4.23     Business purchase agreement dated January 7, 2002 among Galen Holdings
         PLC and Alhow Laboratories Limited (incorporated by reference as
         Exhibit 4.23 to the Company's Report on Form 6-K filed on January 3,
         2003 (File No. 333-12634)).

4.24     Share purchase agreement dated January 7, 2002 among Galen Holdings PLC
         and Almac Sciences Limited (incorporated by reference as Exhibit 4.24
         to the Company's Report on Form 6-K filed on January 3, 2003 (File No.
         333-12634)).

4.25     Share purchase agreement dated May 8, 2002 among Galen Holdings PLC and
         Clinical Trial Services Inc. (incorporated by reference to Exhibit 4.25
         to the Company's Annual Report on Form 20-F filed on January 2, 2003
         for the year ended September 30, 2002 (File No. 333-12634)).

4.26     Share purchase agreement dated May 8, 2002 among Galen Holdings PLC,
         Clinical Trials Services Limited and Clinical Trial Services (US) Inc.
         (incorporated by reference to Exhibit 4.26 to the Company's Annual
         Report on Form 20-F filed on January 2, 2003 for the year ended
         September 30, 2002 (File No. 333-12634)).

4.27     Stock and asset purchase agreement dated August 22, 2002 between ICTI
         Acquisition Inc. ("ICTI") and Galen Holdings PLC (incorporated by
         reference to Exhibit 4.27 to the Company's Annual Report on Form 20-F
         filed on January 2, 2003 for the year ended September 30, 2002 (File
         No. 333-12634)).

4.28     Assignment, transfer and assumption agreement dated December 7, 2002
         between Galen (Chemicals) Limited and Eli Lilly and Company
         (incorporated by reference to Exhibit 4.28 to the Company's Annual
         Report on Form 20-F filed on January 2, 2003 for the year ended
         September 30, 2002 (File No. 333-12634)).

4.29     Saving-Related Share Option Scheme of the Company as amended by the
         Company on February 19, 2002 (incorporated by reference to Exhibit 4.30
         to the Company's Annual Report on Form 20-F filed on January 2, 2003
         for the year ended September 30, 2002 (File No. 333-12634)).

4.30+    Manufacturing Agreement dated December 7, 2002 between Galen
         (Chemicals) Limited and Eli Lilly and Company.

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<PAGE>

4.31+    Estrostep(R) and Loestrin(R) Purchase and Sale Agreement dated March 5,
         2003 between Galen (Chemicals) Limited, Galen Holdings plc and Pfizer
         Inc.

4.32+    femhrt(R) Purchase and Sale Agreement dated March 5, 2003 between Galen
         (Chemicals) Limited, Galen Holdings plc and Pfizer Inc.

4.33+    Transitional Supply Agreement dated March 27, 2003 between Galen
         (Chemicals) Limited and Pfizer Inc.

4.34+    Co-promotion Agreement dated May 1, 2003 between Galen (Chemicals)
         Limited and Bristol-Myers Squibb Company.

4.35+    Option Agreement dated April 1, 2003 between Galen (Chemicals) Limited
         and Bristol-Myers Squibb Company.

4.36+    Development Agreement dated April 2, 2003 between Galen (Chemicals)
         Limited and LEO Pharma A/S.

4.37+    Manufacturing, Packaging, Labelling, Testing, QP Release, Storage &
         Despatch Agreement dated December 2, 2003 between Galen Limited and
         Pharmaceutical Development and Manufacturing Services Limited.

4.38+    Business Purchase Agreement dated December 2, 2003 between Galen
         Limited and Pharmaceutical Development and Manufacturing Services
         Limited.

4.39+    Credit Agreement dated March 5, 2003 among Galen (Chemicals) Limited,
         Galen Holdings PLC, the companies listed on Schedule 1 thereto as
         original guarantors, ABN AMRO Bank N.V., Barclays Capital and The
         Governor and Company of the Bank of Ireland as mandated lead arrangers,
         the financial institutions listed on Schedule 1 thereto as original
         lenders and The Governor and Company of the Bank of Ireland as facility
         agent.

4.40+    Manufacturing Agreement dated September 24, 1997 between Duramed
         Pharmaceuticals, Inc. and Warner-Lambert Company (assigned to Galen
         (Chemicals) Limited pursuant to the femhrt(R) Purchase and Sale
         Agreement dated March 5, 2003 between Galen (Chemicals) Limited, Galen
         Holdings plc and Pfizer Inc.).

4.41*    Master Agreement dated April 1, 2003 between Galen (Chemicals) Limited
         and LEO Pharma A/S.

8.1+     Subsidiaries of the Registrant.

11+      Code of Business Conduct and Ethics.

12.1*    Certification by the Chief Executive Officer Pursuant to Section 302 of
         the Sarbanes-Oxley Act of 2002.

12.2*    Certification by the Chief Financial Officer Pursuant to Section 302 of
         the Sarbanes-Oxley Act of 2002.

13.1*    Certification by the Chief Executive Officer Pursuant to Section 906 of
         the Sarbanes-Oxley Act of 2002.

13.2*    Certification by the Chief Financial Officer Pursuant to Section 906 of
         the Sarbanes-Oxley Act of 2002.

99+      2003 Annual Report and Accounts.

----------------
* Filed herewith.
+ Incorporated by reference to the Company's Annual Report on Form 20-F filed on
  December 31, 2003 for the year ended September 30, 2003 (File No. 333-12634).


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                                   SIGNATURES

         The registrant hereby certifies that it meets all of the requirements
for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.

                                              GALEN HOLDINGS PLC

                                              /s/ R. GEOFFREY ELLIOTT
                                              ----------------------------------
                                              R. Geoffrey Elliott
                                              Chief Financial Officer

January 5, 2004

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